8 Figure Guarantees
Anyone see the pieces in the press recently discussing tens of millions in guaranteed comp? How common are these and what do the deals look like?
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Not uncommon but needs to be 1/2 years experience (think mid 20s not directly after banking), and only for 100-200 people per year. To get to 9 figure guarantees needs to 5+ years experience and good references and $bn+ AUM or tiger cub
I personally managed to get 12-figures guaranteed directly out of undergrad. I might be an outlier tho.
I think you are trying to be funny and sarcastic implying that my comment is ludicrous but check the news
No, actually your comment is pretty accurate, we all read bloomberg.
I'm just trying to be funny on the comments below. 8-figures guarantees for 1/2 YoE buysiders sounds just very delusional.
Usually when you see guarantees of that size it’s to compensate for deferred comp left on the table at the prior role and is paid out over a number of years.
If you made >$100m in PnL in 2022 and are already have a 20% payout the only way a firm can lift you is by guaranteeing multiple years of comp. So you ask to be guaranteed $20m for 2 years and there you go - you have a $40m guarantee. Otherwise there is no reason why you would leave your current firm.
How common is it for someone to be taking home 20mm consistently and the risk associated with that?
I was under the impression that it compensates for the sit out and deferred comp while going forward they would give a higher payout to make the future look better.
Part of the point is that your future income is *not guaranteed* if you stay put in this biz
Top PMs at the platforms are generating or at least have the potential to be generating 9 figures in PnL. Whether it's consistent or not probably depends on the quality of the PM/ team. All of the platforms are generating multiple billions of dollars of PnL per year and the vast majority of that is concentrated in probably 10-20 PMs per platform, the rest of the PMs are just noise. If you are a consistent big PnL generator you are invaluable to the platform which is why they will basically pay anything to retain/acquire you.
If you had a blowout year at your platform in 2022 and aren't confident in yourself to repeat, it makes sense to hedge your compensation by jumping given how hot the market is right now.
Then, what are the incentives to outperform for the PM with guaranteed contracts based on a banner year?
This stuff is so subjective and one-off truly. But have to remember as stated a lot of the guarantee is "deferred comp" and truly if you actually asked the firm to retire they would make an arrangement to payout some of that deferred comp (its deferred so you don't go work elsewhere). Anyways know a pod who have a very similar situation come up and the PM was offered 8 figures after 2 very good years.
The incentive came with major autonomy at the new platform, ability to geographically expand offices, ability to hire the team they wanted, ability to negotiate all costs with vendors from day1 and so on. Basically you have full marketing/financial support and are running your own thing from day1 that is a quite a big incentive to succed the way you want.
Guarantees are a minimum, not a cap.
Also 2022 was a big year for a lot of people on rates side, they can't seriously just project that income forward and make a deal off that?
That's exactly what they do
Big LO Allstar PMs
Top PMs at BLK were making double Larry Fink's comp due to their bonus being attached to their PnL. It really depends on how good you are and where you end up but these are top of the top type of guys.
All things happen for good reason.
I would venture a guess that 8 figure gaurantees happen for sure. I’m also certain that the people getting paid 8 figure guarantees already made 8 figures at least a couple times in the past and proved themselves / have a multi-year track record. In other words, star PMs or senior partners at brand name funds that are already ‘made.’
These firms are mostly not stupid. They don’t give out 8 figure guarantees unless the ROI makes sense.
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