2/14/10

How much lower is the bonus at good middle market firms vs bulge bracket? Anyone knows what analyst bonuses (last yr) and associates bonuses (this yr) were at firms like weisel / baird / blair? Is the base in line with bulge and bonus about 25% lower? Do these middle market firms pay 100% bonus in cash to associates and analysts or stock is good part of comp?

Comments (16)

2/14/10

I can only speak to the bonuses received at my particular MM bank, but I believe it to be pretty representative of the rest of the MM shops out there. I will say that I believe that MM banks in general have a much larger bonus band due to the fact that profitability can vary widely by year and there isn't such a defined benchmark like the BBs have.

In terms of cash/stock allocation, many MM banks (and boutiques) are not public companies. As a result, they are forced to pay their analysts in cash. Also, the purpose of paying compensation in stock is to align the individual's interests with those of the bank. The analyst role typically only lasts 2 years and therefore does not lend itself well to this model. Associates are more likely to see a portion of their bonus in stock, but I don't have any experience in that area, so I'd just be speculating.

As for the actual $$$s received at MM banks, I'm assuming your guess that bonuses are 25% lower is based on the general obsession for BBs on this board. My experience has been quite difference. In 2007, the bonuses at my bank we're higher than IB bonuses at Goldman Sachs and the rest of Wall Street. In 2008, when banks started to falter, our bonuses were less than 10% off 2007 bonuses. In 2009, when people were reporting bonuses of 20-30k, we received more than twice that.

So, while I still stand by my comment that I have just 1 data point and that it can vary widely by bank, I wouldn't assume that MM banks pay their analysts any less than the BBs just because they are MM banks.

CompBanker

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2/14/10

that was very informative CompBanker, thanks for your input!

2/16/10

agree with compbanker. i know a friend at blair that received bonuses that were higher than bb in the same timeframe compbanker mentioned above. heard hw paid at or above street during that time as well.

2/16/10

From a friend who works at MM as an analyst, I can verify $70 base and $70 bonus last year. Don't know if that was in all cash or cash/stock.

CompBanker is right. Last year, when BB were being rocked, MM paid out handsomely.

2/16/10

how do boutiques compare to standard mm banks?

2/16/10

What about Baird? Do they pay in line with HW and Blair or they are below and cover up with better hours?

2/16/10

What is the standard salary excl. bonuses in London (in pounds) for 1st year analysts ? What about the average for BBs ?

2/16/10

Why do pol choose mm banks sometimes?

In reply to CompBanker
3/23/12

CompBanker:
I can only speak to the bonuses received at my particular MM bank, but I believe it to be pretty representative of the rest of the MM shops out there. I will say that I believe that MM banks in general have a much larger bonus band due to the fact that profitability can vary widely by year and there isn't such a defined benchmark like the BBs have.

In terms of cash/stock allocation, many MM banks (and boutiques) are not public companies. As a result, they are forced to pay their analysts in cash. Also, the purpose of paying compensation in stock is to align the individual's interests with those of the bank. The analyst role typically only lasts 2 years and therefore does not lend itself well to this model. Associates are more likely to see a portion of their bonus in stock, but I don't have any experience in that area, so I'd just be speculating.

Always having the answer to my questions! Search function :)

Thanks CompBanker! Do you work at a bank based out of the midwest that offers both PE and IB? Based on how you answer some questions, I feel I may start my FT this summer at your firm.

As for the actual $$$s received at MM banks, I'm assuming your guess that bonuses are 25% lower is based on the general obsession for BBs on this board. My experience has been quite difference. In 2007, the bonuses at my bank we're higher than IB bonuses at Goldman Sachs and the rest of Wall Street. In 2008, when banks started to falter, our bonuses were less than 10% off 2007 bonuses. In 2009, when people were reporting bonuses of 20-30k, we received more than twice that.

So, while I still stand by my comment that I have just 1 data point and that it can vary widely by bank, I wouldn't assume that MM banks pay their analysts any less than the BBs just because they are MM banks.

Obsessed is a word the lazy use to describe those who are dedicated.

In reply to CompBanker
3/25/12

CompBanker:

In terms of cash/stock allocation, many MM banks (and boutiques) are not public companies. As a result, they are forced to pay their analysts in cash.

So, while I still stand by my comment that I have just 1 data point and that it can vary widely by bank, I wouldn't assume that MM banks pay their analysts any less than the BBs just because they are MM banks.

Do you know anywhere that pays analysts in stock???

If you are at a mid-market bank (I also think it's important to distinguish mid-market from true boutique in this particular case) that is strong in a particular product (Jefferies lev fin, Houlihan restructuring, Harris Williams M&A) this might be the case, and also especially in light of where the traditional 'big banks' are paying over the last few years (UBS, Barclays, GS in particular come to mind as places that have had pretty brutal pay cuts at the junior level), but you should be careful applying this to the "middle market" as a whole, or ESPECIALLY in extending it to true "boutiques".

It's really a bank-by-bank process these days as all banks are grappling with various transitional issues, personnel management, etc. and the old order has been shaken up. For example, guess who the highest-paying bank was in 2011? All signs point to Wells Fargo. Surprising?

In reply to Bayside0987
3/25/12

Bayside0987:
CompBanker:

In terms of cash/stock allocation, many MM banks (and boutiques) are not public companies. As a result, they are forced to pay their analysts in cash.

So, while I still stand by my comment that I have just 1 data point and that it can vary widely by bank, I wouldn't assume that MM banks pay their analysts any less than the BBs just because they are MM banks.

Do you know anywhere that pays analysts in stock???

If you are at a mid-market bank (I also think it's important to distinguish mid-market from true boutique in this particular case) that is strong in a particular product (Jefferies lev fin, Houlihan restructuring, Harris Williams M&A) this might be the case, and also especially in light of where the traditional 'big banks' are paying over the last few years (UBS, Barclays, GS in particular come to mind as places that have had pretty brutal pay cuts at the junior level), but you should be careful applying this to the "middle market" as a whole, or ESPECIALLY in extending it to true "boutiques".

It's really a bank-by-bank process these days as all banks are grappling with various transitional issues, personnel management, etc. and the old order has been shaken up. For example, guess who the highest-paying bank was in 2011? All signs point to Wells Fargo. Surprising?

I'm not sure what you're taking issue with or trying to argue.

All CompBanker is saying is that because many MM/boutique banks are privately held, they are forced to pay analysts in all cash, because paying in stock is the same as buying into the firm (firm in this case referring to a business run more like a partnership than a typical pubic business). This is a good thing for analysts, because for the most part, they're only going to be there for a couple years anyway, and need the cash over some (really) long term deferred compensation.

In reply to THE PsYcHoLoGy
3/25/12

THE PsYcHoLoGy:
CompBanker:
I can only speak to the bonuses received at my particular MM bank, but I believe it to be pretty representative of the rest of the MM shops out there. I will say that I believe that MM banks in general have a much larger bonus band due to the fact that profitability can vary widely by year and there isn't such a defined benchmark like the BBs have.

In terms of cash/stock allocation, many MM banks (and boutiques) are not public companies. As a result, they are forced to pay their analysts in cash. Also, the purpose of paying compensation in stock is to align the individual's interests with those of the bank. The analyst role typically only lasts 2 years and therefore does not lend itself well to this model. Associates are more likely to see a portion of their bonus in stock, but I don't have any experience in that area, so I'd just be speculating.

As for the actual $$$s received at MM banks, I'm assuming your guess that bonuses are 25% lower is based on the general obsession for BBs on this board. My experience has been quite difference. In 2007, the bonuses at my bank we're higher than IB bonuses at Goldman Sachs and the rest of Wall Street. In 2008, when banks started to falter, our bonuses were less than 10% off 2007 bonuses. In 2009, when people were reporting bonuses of 20-30k, we received more than twice that.

So, while I still stand by my comment that I have just 1 data point and that it can vary widely by bank, I wouldn't assume that MM banks pay their analysts any less than the BBs just because they are MM banks.


Always having the answer to my questions! Search function :)

Thanks CompBanker! Do you work at a bank based out of the midwest that offers both PE and IB? Based on how you answer some questions, I feel I may start my FT this summer at your firm.


The Psychology, I didn't work at the same place that you work at now. However, I do know the head of your group, Mr. L and one of the directors, Mr. K....

CompBanker

In reply to timatom90
3/25/12

timatom90:
Bayside0987:
CompBanker:

In terms of cash/stock allocation, many MM banks (and boutiques) are not public companies. As a result, they are forced to pay their analysts in cash.

So, while I still stand by my comment that I have just 1 data point and that it can vary widely by bank, I wouldn't assume that MM banks pay their analysts any less than the BBs just because they are MM banks.

Do you know anywhere that pays analysts in stock???

If you are at a mid-market bank (I also think it's important to distinguish mid-market from true boutique in this particular case) that is strong in a particular product (Jefferies lev fin, Houlihan restructuring, Harris Williams M&A) this might be the case, and also especially in light of where the traditional 'big banks' are paying over the last few years (UBS, Barclays, GS in particular come to mind as places that have had pretty brutal pay cuts at the junior level), but you should be careful applying this to the "middle market" as a whole, or ESPECIALLY in extending it to true "boutiques".

It's really a bank-by-bank process these days as all banks are grappling with various transitional issues, personnel management, etc. and the old order has been shaken up. For example, guess who the highest-paying bank was in 2011? All signs point to Wells Fargo. Surprising?

I'm not sure what you're taking issue with or trying to argue.

All CompBanker is saying is that because many MM/boutique banks are privately held, they are forced to pay analysts in all cash, because paying in stock is the same as buying into the firm (firm in this case referring to a business run more like a partnership than a typical pubic business). This is a good thing for analysts, because for the most part, they're only going to be there for a couple years anyway, and need the cash over some (really) long term deferred compensation.

My post can be summarized as follows:

1. Every single bank in the US pays analysts (and most associates, especially 1st/2nd years) in 100% cash. This is not a "middle market" phenomenon. There is not a single investment bank that has ever paid analysts with stock or deferred compensation, or even floated the idea of doing so, to my knowledge.

2. It's definitely fair to say some MM banks have paid at or better than some of the larger banks, and with greater consistency, over the very recent historical period.

3. Despite taking point #2 as accurate, it is not adviseable to somehow attempt to apply this rule generally as a "mid market vs bulge bracket" dilemma. Given the new landscape, all bulge brackets are not created equal, nor are all mid market banks, and compensation must be evaluated on a case-by-case basis (not only by TYPE of firm (e.g. MM vs BB vs boutique) but by specifically WHICH firm and furthermore WHICH product at that firm). There is a meaningful disparity, for example, between HL restructuring and HL corporate finance, let alone between HL and RBS or HL and JPM.

In reply to Bayside0987
3/26/12

Bayside0987:
1. Every single bank in the US pays analysts (and most associates, especially 1st/2nd years) in 100% cash. This is not a "middle market" phenomenon. There is not a single investment bank that has ever paid analysts with stock or deferred compensation, or even floated the idea of doing so, to my knowledge.

If you re-read the original question as well as my response, you'll realize that I didn't reference BBs when discussing stock based compensation. All I said was that MMs typically are NOT publicly traded and therefore couldn't issue stock even if they wanted to (I recognize you can issue private company stock, but that's complicated and not going to happen here, so I'm ignoring it). Furthermore, the original poster's question was asked in February 2010 in the heart of the crisis. At that time, compensation practices were being reviewed / modified and there was a tremendous amount of discussion regarding stock-based compensation as opposed to cash bonuses. It was not unreasonable to assume that analysts could see a shift in their compensation structure as well.

Note that I later compare pay at MMs to BBs, but the way you quoted me in your response, you took out an entire paragraph that shifted the discussion from stock based compensation to strict compensation numbers. That completely distorts the point I was making.

CompBanker

In reply to CompBanker
9/16/13

CompBanker:

I can only speak to the bonuses received at my particular MM bank, but I believe it to be pretty representative of the rest of the MM shops out there. I will say that I believe that MM banks in general have a much larger bonus band due to the fact that profitability can vary widely by year and there isn't such a defined benchmark like the BBs have.

In terms of cash/stock allocation, many MM banks (and boutiques) are not public companies. As a result, they are forced to pay their analysts in cash. Also, the purpose of paying compensation in stock is to align the individual's interests with those of the bank. The analyst role typically only lasts 2 years and therefore does not lend itself well to this model. Associates are more likely to see a portion of their bonus in stock, but I don't have any experience in that area, so I'd just be speculating.

As for the actual $$$s received at MM banks, I'm assuming your guess that bonuses are 25% lower is based on the general obsession for BBs on this board. My experience has been quite difference. In 2007, the bonuses at my bank we're higher than IB bonuses at Goldman Sachs and the rest of Wall Street. In 2008, when banks started to falter, our bonuses were less than 10% off 2007 bonuses. In 2009, when people were reporting bonuses of 20-30k, we received more than twice that.

So, while I still stand by my comment that I have just 1 data point and that it can vary widely by bank, I wouldn't assume that MM banks pay their analysts any less than the BBs just because they are MM banks.

CompBanker,

Do you have any info on how much the associates/VPs/MDs get paid at top MM (Blair,Baird,Lincoln,Houlihan) firms compared to the BBs?

Also, you said that the profitability can vary greatly in the MM. Would that mean there is less job security as a mid-senior level banker at MM firms?

In reply to DoctorAndre
11/10/13

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