Lazard, the Investment bank, yesterday said it would pay staff more in cash and less in equity in a bid to retain key workers and lure top banking talent away from rivals.
While other Wall Street firms have deferred bonuses under pressure to align rewards more closely to long-term performance, Lazard has eliminated deferred cash payments.
The bank yesterday said compensation expenses nearly tripled in the fourth quarter, to $615.5m (£387m). In total for the year, Lazard paid out $1.3bn to workers, up 16 per cent on the previous year.
The company also announced that the death of its chief executive, legendary dealmaker Bruce Wasserstein, had helped push it into the red in the last quarter of 2009.
The bank reported a fourth-quarter loss after the compensation changes and a charge of $86.5m relating to the payment of restricted share options to Wasserstein’s estate.
Lazard posted losses of $142.3m, but reported continuing growth in its restructuring business as companies struggling in the financial crisis turned to the bank for advice.
Lazard’s financial advisory revenue, including restructuring, capital markets and mergers and acquisitions, rose 24 per cent to $313.6m.
The bank hopes its change in pay policy will help it poach bankers from competitors who have had to restrict their payouts following bailouts from the US Treasury.
Lazard received no government aid during the financial crisis.
Without the one-off charges, Lazard would have made a net profit of $11.1m on operating revenue of $514.4m, up 28 per cent on the same period last year.
Even excluding the charges, however, Lazard’s results fell short of analysts’ expectations.
Shares in the bank fell nearly three per cent on the New York Stock Exchange to $39.89.