LPL Financial employees were told this week that they would not get raises this year, according to a company memo, a copy of which was obtained by
InvestmentNews.
In December, LPL
informed its 3,400 employees that it would delay raises until this September.
At the time, the country's largest independent broker-dealer said it was pushing back performance reviews from March to September. Raises for employees, known as “merit increases,” are tied to those reviews.
Those plans have been scrapped. “Late last year, we announced that we would move the merit cycle to September, allowing more time for the Management Committee to assess our financial outlook and our ability to increase our labor costs,” according to a company memo. Citing market volatility as a factor, the memo said: “There will not be a firm-wide, formal merit pool for salary increases this year.”
“We understand that many of you were expecting a merit increase this year, and we recognize how hard this can be on you and your families,” according to the memo.
Instead, some LPL employees will be eligible for one-time discretionary bonuses, which will be in addition to the firm's annual bonus. The discretionay bonuses will be paid on Sept. 30, and those with the title senior vice president or above are not eligible for that award, according to the memo.
(More: LPL Financial's problems keep piling up)
The non-recurring discretionary bonuses will not affect the company's cost structure for next year. LPL managers will also have the flexibility to promote employees, according to the memo.
"Earlier this week, we communicated to employees our decision to provide one-time discretionary bonuses to select employees instead of firm-wide merit increases for 2016,” said company spokesman Jeffrey Mochal. “While our business remains strong, we believe continued market volatility and uncertainty warrants a more cautious approach to expense management at this time."
Last October, LPL CEO Mark Casady told investors that the company intended to keep a sharp eye in 2016 on the growth rate of its expenses. At the end of last year, LPL eliminated as many as 70 jobs.
