Higher Bonus or Carry
Hi,
Would you rather have a 25% higher bonus each year with a stable team in a £5bn fund (nice culture, low staff turnover, most team members there for 5+ years) or lower bonus plus 1%-2% carry in a new team in a £1.5bn-2bn fund (high staff turnover in the last years, most other people joined 8-18 months ago, unknown if nice culture).
Realistically a low turnover, nice culture spot is great and bonus is awesome. If you stick around they for sure will have co invest or carry at a higher level. If you go with option 2, great you get carry but if you hate it then you wont be around to see it. You should really figure out culture on the second job.
Of course culture is important and will define your working relationships and ability to get promoted but you should also think about the people who set up the fund, their track record, the fund track record, etc. Also may be worth reaching out to people who’ve left the fund and get some colour on it. All the best
Question... is this two different offers/positions in different parts of the SAME company, or is offers/positions at two totally different firms?
It makes a big difference... as the status and nature of the firm matter a lot in how valuable and real 'carry' really is.
That said.... Long-Term Incentive Programs (LTIP) for which 'carry' is a form are only really really worthwhile IF you stay 'long-term' (which is what LTIP is to 'incentivize' you to do... get it...). Thus, if you are still at a 'jump around' part of your career, then the higher bonus is probably better. If you really believe in the firm and your desire/ability to stay long-term.... then more/better carry is probably smart (assuming you think it will have value and the firm is stable of course).
I have no idea if this applies to OP (since VP in RE could be just about anything)... but I get a sense from WSO that 'juniors' care wayyyy to much about participation in carry than annual comp. Frankly, getting LTIP at early stages of career can be suboptimal for two reasons.... 1. You feel 'golden handcuffs' and don't leave when you should and 2. The firm is likely paying you less in salary/bonus as a result (not universal, but often happens when analysts/associates get LTIP). Of course, if you and the firm thrive, you get promoted there, etc. etc.... it could make you substantially wealthier in the long-run. All about risk/trade-offs, but in general, LTIP isn't a legit thing to bargain for until at the mid to senior career point.
It is for two different companies which operate in the same space.
Given that context, only thing I'd add is this....
You don't really give any head to head comp comparison figures, so does the 'carry' job pay more under your expectation of the value of that carry? Are bases equal? Tbh, really difficult to assess the relative comparative economics of the two offers. With 'carry' vesting period and general probability of payout (like how profitable is the fund, etc.) matter tons, and without knowing a lot of details, a guessing game. Salary + bonus is easy to figure, but still..... without some apples to apples numbers, can't really speculate on if the value of the carry more than out paces the value of the higher bonus (I'd want to be like at least 2x greater over time, but that is literally some random rule I just came up with lol).
That said....... I think I'd care tons more about the quality and lifestyle and progression and everything else about these two firms. Given the detail you gave, it really doesn't sound like these are apples to apples firms. So, perhaps, consider where you want to work if comp all equal? Then if that shop isn't the highest paid (as I think it must be, as you would just accept and not post the dilemma...), then try and negotiate up that firm to minimize the gap.
As I said before, carry is only worth it if you stick around!
Thank you for your response. Base is pretty much same for both firms (2k delta). The bonus on the 5bn fund has been quoted as 80%+ (no cap officially and has been significantly above 100% for prior years) vs the other one at 70% to 100% (cap). Petty much same investment strategy but the smaller fund is relatively new with only one predecessor and has only raised 1/3 of target capital.
So, I guess a lot comes down to how "significant" above 100% is or will be on firm one, as firm two might not be as far off (one think 120% of base vs. 300% of base for firm 1 of course...).
You seem to have more than a little reservations on the smaller firm, if you gut is telling you that's an issue, I'd probably follow that notion. Carry is only really worthwhile if staying there for a very long time (in most circumstances).
would take immediate salary/bonus in most cases. VERY few people stick around at the same company for 7-10+ years. Maybe if I was settled down with kids in school, just bought a new house, and felt like I was unlikely to make any life changes for a while I'd be more drawn to the LT deferred comp. If you're <35 just take the cash.
Always current income unless you want to marry the company you work for. I know people dream of carry, but it is REALLY not all it's cracked up to be unless you're the one giving it to yourself, because you, you know, own the business.
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