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Slightly larger bonus checks expected on Wall Street

August 17, 2012: 11:21 AM ET

Bank CEOs were grilled in Congress about their pay packages during the financial crisis. But top executives on Wall Street are expected to get bonuses that are 40% smaller than the heyday of 2007.

Paychecks for executives and top employees at the world's largest financial institutions are expected to get only a little bit bigger in 2012.

Compensation at the big banks will remain far below the highs of 2007, but overall, top executives could see paychecks and bonuses jump by as much as 10% in 2012.

Compensation consulting firm Johnson Associates projects that overall pay will hover between remaining flat and increasing up to 10%, according to its latest estimates for 2012.

Investment bankers, particularly those advising on mergers, are the only bank employees expected to see a pay cut.  Johnson Associates estimates that investment bankers' paychecks could be cut by as much as 10%.

Johnson Associates' report acknowledges that compensation will be reined in for years to come not only because the industry's profits have been lackluster, but because of the public's increasing frustration with the bank's practices.

According to the report, "the LIBOR scandal, errant trades, and other high profile errors and losses" will keep the "public spotlight on compensation continues for foreseeable future."

Even if bonuses edge up this year, they will be down roughly 40% from 2007 levels.

Slightly higher bonuses in 2012 may make sense for some bankers. After all, investors in bank stocks have had a nice run this year, after being battered in 2011. Bank of America (BAC) and Wells Fargo (WFC) have inked the sharpest gains of 44% and 24% respectively. Citigroup (C), Goldman Sachs (GS), and JPMorgan Chase (JPM) (even after its $6 billion trading loss) are all up more than 10%. Morgan Stanley (MS), down 4%, is the only big bank in the red this year.

Still, many big banks are also busy cutting staff. So any pay raises will likely be accompanied by more layoffs too.

Related: Wall Street prepares for more layoffs

Meanwhile, any raises for bank CEOs will come on top of what's already considered extravagant pay to most Americans.  JPMorgan Chase's Jamie Dimon, the best paid bank CEO, received a 2011 compensation package of $23.1 million, up 11% from 2010. John Stumpf, CEO of Wells Fargo came in just below Dimon with a $19.8 million pay package.

Citigroup's CEO Vikram Pandit was granted a $14.9 million pay package, but his 2011 compensation is still in question. Shareholders voted to reject his package, and Citigroup is still in the middle of talking to shareholders about how to restructure it.

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Maureen Farrell
Maureen Farrell
Staff writer, CNNMoney

Maureen Farrell is a staff writer at CNNMoney and covers Wall Street, banking, mergers and the stock and bond markets. Prior to joining CNNMoney, she covered venture capital and entrepreneurs for Forbes, and mergers and bankruptcy for Mergermarket and Debtwire, both divisions of the Financial Times.

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