Is it common? Looks like everyone in my team got bonuses with 1 year clawback, in one of the big MM. If it continues like this, then if someone leaves to go elsewhere (or even moves to a different continent within or outside the firm, for e.g.), does he need to give back 1 year bonus? That seems ridiculous.
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I posted this yesterday and my post was shadow banned. I suggest u be careful.
Thanks, did they tell you why was your post banned?
Not at all, post no longer show up on WSO at all but can find through search
Its very well known that all the pods have fairly scummy bonus/noncompete arrangements.
Generally 25% of your comp will be paid in deferred that vests on a 2 to 3-year cliff (if you leave within 2 or 3-years of that bonus day you lose it all, including if you are fired). Signing bonuses generally have pretty onerous vesting periods as well.
Non-competes also range from 6-24 months for all the pods.
Its pretty industry standard to do this though (so I wouldn't pick on any specific MM for doing this).
Interesting, I was not aware of this as I am quite junior in this industry. So the only way is to try to get the new firm to compensate you for the bonus you miss out + 1st year guaranteed bonus, assuming you are on 6-12 months non-compete, you miss out on quite a lot.
Yep, the whole point is to make it very unattractive for a new firm to poach you.
That’s not what this is at all. This is clawback on every cent of cash bonus across all IPs, rolling 12 months basis
Okay, I never said that what I was describing was OPs situation lol.
Was just saying that its well known they have tough clawback/noncompete/deferred policies.
This is quite common, so calm down.
Also common that if you depart for a competitor, the competitor will upfront cover the amount you are clawed back.
I think it’s not uncommon, typically I think it only applies when poached (since you’re prob getting made while from your new fund), but tends to be waived if you’re let go
At least in NY, if you are let go, then non-competes are unenforceable.
Unfortunately that is not true. I speak from personal experience. And even if it were true, your company will still act like the non-compete is enforceable and send you threatening legal letters, so you still have to hire a lawyer to credibly threaten a counter-lawsuit, and in the meantime other companies will be reluctant to hire you or get involved.
Whoa, wait, those are entirely different things. Deferring the bonus for a year is very common (as others have noted, it's a stealth non-compete measure and you may lose the money if you leave for a competitor). If that's what you mean, then it's standard. But you used the word "clawback"? To me, a clawback means they can take back the money ***even if you *don't* leave the company*** (for instance if you booked a position that made money in the first year and you got a bonus for it, but then that position lost big in the second year so they take back the first year bonus).
Assuming that's what you mean by clawback...that may be standard for senior executives, but I've never seen it in any of my contracts.
What if you get laid off? I assume there’s no clawback then
Laid-off or quit doesn't make a difference for the non-compete agreement or for deferred comp. The contract is still enforceable either way. If you're laid off, then many companies will voluntarily waive your non-compete and pay out some of your deferred comp just so they don't get a bad reputation; but it's not required for them to do so. I have seen lots of companies enforce non-compete agreements on laid-off employees.
Wrong take. It makes a difference 99% of the time. You can't fire someone and prevent them from working. Sure, there might be some bad actors that try and intimidate you, but it's also on you to defend your rights, in court if need be.
But again, most contracts specify that the non-compete only applies if you leave of your own will.
I would read your clause more clearly. When some pods do well most HR teams will make a new hefty non-compete that is 1 year in length or so to everyone in the team. Usually other top MMs are written in that makes deferred more impactful. Cause lets be real its not exactly hard for a pod to leave one MM to another otherwise.
As for the clawback stipulation, that is to protect the firm if the whole pod lied and things go off the rails right away. We are not talking just losing P&L made prior year we talking about legally misrepresenting things or an investigation type shit. In general do not worry about it.
To clarify, as per contract, if I leave the firm, or if I am terminated for cause, only then I need to pay back. So, I assume that if I am laid off, I wont have to pay back.
This is the right take 99% of the time.
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