Incentive pay is set to rise about 40 percent, according to Johnson Associates, a compensation consulting firm in New York. The group said fixed income and equities workers will see the biggest payouts, as both areas had strong rebuilding years.
In contrast, declines of 15 percent to 30 percent are projected at hedge funds, private-equity firms and prime-brokerage operations, as assets under management continue to suffer. The payout levels are lighter than the boom years 2006 and 2007, but the Johnson Associates survey shows a steep recovery from last year.
Goldman Sachs, Morgan Stanley and JPMorgan Chase's investment bank are expected to pay record combined bonuses this year. The firms will hand out $29.7 billion in bonuses, according to analysts' estimates. That's up 60 percent from last year and more than the previous high of $26.8 billion in 2007.
But not all investment banks are doling out cash bonuses this year.
Goldman Sachs is planning to pay top executives in restricted stock rather than cash, the company announced recently. The move comes after the company was heavily criticized for setting aside more than $16 billion for top employees.
The size of this year's bonus payments to investment bankers is also obscuring Manhattan's continued struggles in the financial sector.
The number of finance industry jobs in New York City has fallen by 41,400 in the two years through August, according to the New York State Department of Labor.
None the less, the bull market is ushering in a renewed appetite for luxury among big-spending Wall Street firms.
Todd Rome, president of Blue Star Jets in Manhattan, one of the world's largest private aircraft charter brokers, said that several groups of Wall Street traders have already chartered fully catered planes to fly to the Super Bowl in Miami in February.
"Starting last month, this business has had a facelift," said Rome, whose firm as access to over 4,000 aircraft worldwide. "It starting to feel like we never really had a recession."