Where is nothing more sensitive to those of us in the industry than our compensation. While many of us entered the industry in search of interest and challenge, after a few years we learned that the money wasn't bad either. While technologists, until recently, never received the compensation that traders and bankers received, as one of my old bosses at Lehman used to say, "It was better than a sharp stick in the eye."

Well, that was true until a little more than a year ago, when the bottom fell out. Bonuses were slashed, jobs were outsourced and folks were laid off. It has been a pretty brutal 18 months for Wall Street professionals. Not that the industry didn't deserve it, as losing a few trillion dollars certainly isn't bonus-worthy in most Americans' eyes.

The world, however, is changing again. The Federal Reserve has kept short-term interest rates at virtually zero (.25 percent), while longer-term rates are around 400 to 500 basis points. This provides fertile ground for investment banks with moderately healthy balance sheets to make serious money. And they are. Banks' profitability is up. Firms such as Goldman Sachs, J.P. Morgan and others are reporting respectable earnings -- so respectable, in fact, that we are on track to have one of the most profitable years ever.

That said, life will not be all rosy on Wall Street. While a number of banks have paid off their bailout obligations, Main Street, Washington and Brussels still are left with a sour taste in their mouths. And, unfortunately, this year they may act.

The Obama administration hired a pay czar, European legislators/regulators are seriously discussing limiting bankers' compensation, and the Fed proposed policing compensation policies to encourage the limiting of risk-taking practices. All of these factors, including the threat of a popular rebellion, point toward greater compensation oversight as well as structuring bonus compensation in ways that it can be both vested and clawed back. This will mean a greater percentage of compensation will be structured in vested stock, options or delayed cash, which can be pulled back given disastrous financial results.

So how does this tie in to investment? If firms are earning record profits and a greater percentage of their compensation (firms' largest expense, equal to approximately 50 percent of non-interest expense) is offered in delayed vesting stock, options and/or cash, what are firms going to do with all the cash they didn't lay out?

Will they give it back to the government? Yes, if it is owed. Will they give it back to investors? Yes, at least a portion. Will they reserve it for futures payments? Yes. But even if this "excess" cash is reserved, will firms just let it sit there idle on their balance sheets? Probably not.

So what will they do with the cash? Invest it.

An Investment Boom

While this is my own slanted and probably overly optimistic view, if we do continue the year on a profitable trajectory, and either government or corporate boards do restructure pay (both highly likely), we will enter a period of significant investment. This will be a deferred compensation-based investment boom.

Instead of giving all of the profits back to investors or -- egad -- the government, firms/banks will begin to reinvest in their businesses. During this period, they will not only acquire new businesses, they will upgrade their technology infrastructure and restructure their operations to point them into and through the next decade.

What will some of those investments be? While that isn't the point of this column, we can certainly guess in a few directions: Increased electronic trading, better risk management, enhanced data facilities and more-efficient operations absolutely will be in the cards.

While Wall Street compensation always is a hot button, it may be better for the industry if we look at the upside of deferred compensation being used for an industry investment boom, rather than the boom coming from Huns marching down Wall Street if compensation practices are not changed.