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Who is—and isn’t—getting a holiday bonus this year

Fewer companies will spread Christmas cheer with cash and big bonuses seen last year are being downsized in some sectors

Fewer companies will award year-end bonuses this year compared with last year (Photo: Reuters)Premium
Fewer companies will award year-end bonuses this year compared with last year (Photo: Reuters)

This year’s Christmas bonuses are complicated by economic jitters and rounds of layoffs in technology, media and beyond.

Many big businesses have said they would pay year-end bonuses to workers after a strong year. Lowe’s Cos., the home-improvement chain, is spending $200 million on bonus pay for its hourly workers, while the Venetian Resort Las Vegas will give $1,500 to every employee. Others, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., are slashing their coming round of bonus payments.

Fewer companies will award year-end bonuses this year compared with last year, according to a survey from Challenger, Gray & Christmas Inc., an outplacement and executive-coaching firm. Of 252 U.S.-based companies across a range of sectors, 27% said they wouldn’t award bonuses this year, compared with 23% in 2021.

Of companies awarding year-end bonuses, more than 80% said the dollar value would be roughly equal to last year.

The results reflect the uncertainty and mixed signals about the economy and the job market this year, said Andy Challenger, senior vice president at the firm.

“It’s pretty clear that employers are concerned about potential recession across lots of different industries and having to cut back on compensation and benefits," he said.

At the same time, while the job market has started to show initial signs of cooling, overall it’s still quite strong.

“The labor market hasn’t crashed," Mr. Challenger said. “Some companies are still struggling to attract people, and they’re having to pay. Part of that is a function of inflation as well."

Inflation is a big reason employees at Sticker Mule, an Amsterdam, N.Y.-based custom-printing company, are receiving $1,000 bonuses this Christmas.

The year wasn’t an incredible one for Sticker Mule’s business, and under normal conditions there would have been no bonus, said Anthony Constantino, co-founder and chief executive. But he said he also recognized employees were in a tough situation with rising consumer prices.

We said, “Let’s do something for them and let’s also put some pressure on ourselves to have a great year next year," Mr. Constantino said.

Year-end holiday bonuses have been a longtime fixture to motivate salaried workers, especially in boom years. They can range from $100 gift cards to tens of thousands of dollars, depending on the role and industry.

Bonus payouts for private-equity fund managers could drop as much as 15% this year compared with 2021, while public-equities investment managers could endure bonus cuts of as much as 25%, according to a new compensation forecast from Johnson Associates, a Wall Street compensation consulting firm.

Investment bankers at the largest institutions will receive the sharpest cuts to their bonus payments, with some expected to be as much as 40% lower. The projected declines stem partly from inflated incentive payments coming out of last year’s record level of activity for private equity, investment bankers and others on Wall Street, Johnson said.

New York City, which collects city-level income taxes, has issued an economic forecast that projects that this year’s bonuses at Wall Street firms will fall from record highs seen in 2021.

The forecast anticipates that bonuses will decline 22% based on lower profits collected in the first half of 2022, though that figure could slump further, according to the New York state comptroller’s office.

The investment banking divisions of JPMorgan Chase and Goldman Sachs plan to cut bonuses significantly after the highs from a year ago. Banks typically pay out their bonuses early in the year, but word of the downsized amounts is reverberating around Wall Street now. Spokesmen for the banks declined to comment.

Danny Vincent, a 42-year-old litigator and appellate lawyer in Atlanta, said she expects to get a smaller bonus this year in light of the economy. Market volatility, inflation and rising interest rates have put a damper on corporate merger and acquisition activity, which in turn has cut into a key stream of revenue that has fueled recent boom times in the legal industry.

“That’s just the way the year has been," she said.

She also made a choice to set clear boundaries between work and her personal life, meaning fewer billable hours. She said she doesn’t want to sacrifice having a personal life, spending time with her daughters or taking vacations in pursuit of more money, as often happens in her field.

“There is just so much fever right now in big law about bonuses," she said. “I work hard. I get paid well, and I’m always happy to make more money. But I don’t think people realize how big a trade-off that money is."

Ms. Vincent, who will move up from associate to partner in January, said she would probably save the bonus money, “especially because my income as a first-year partner may be unpredictable." As a partner, she will switch from receiving a salary to compensation based on such factors as bringing in new clients.

Ray Morrison, a 29-year-old software engineer in Youngstown, Ohio, said he was recently surprised to wake up to alerts about direct deposits to his bank account that he later learned was a $300 Christmas bonus, which came on top of a $200 Thanksgiving bonus. His employer, O.C. Tanner, a workplace software and services company based in Salt Lake City, traditionally gives bonuses throughout the year and at the holidays, said Mindi Cox, chief marketing officer and people officer. It recently added another $50 for a holiday meal, she said.

Mr. Morrison said he appreciates the extra cash and sees the firmwide bonuses as another sign of how much the company cares about its workers. He plans to use the money to catch up on bills, including paying down credit-card debt amassed when he was unemployed for a period in 2021 after being let go from his job at an auto-parts factory.

“Keeping five kids afloat without a job required some extraordinary measures," he said.

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Published: 11 Dec 2022, 06:22 PM IST
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