Citadel Equities analyst terms
I know analysts at Citadel Global Equities are given a capital allocation for them to manage under the PM's supervision. Does anyone knows how the pay-out is structured for this? (i.e. does the analyst get a 10% of the P&L from that sleeve and the PM a 5%, etc? Also, what is the average AUM allocated to a Global Equities analyst? Are we talking about $100m or is it much larger in the $500+m ballpark?
I work at a place with relatively similar arrangement to Citadel and my terms are something along the lines of 10% total team payout plus 50% of any payout related to my performance/sub-strategy. Again, all handshake / completely discretionary.
Your numbers seem right. Baseline I've gotten from a reliable source is:
Jr. PM 15% of PnL Seasoned PM 20% Analyst cut of book 5% (remaini g 10-15% to PM)
So 7% could go to Sr analyst level (who are on close to getting PM seat usually).
The PM I know that started off at 15% was there for years before the promotion, who moved up through the ranks and could ramp up quickly vs. a fresh hire who doesn't know the systems and processes in place.
10% net just seems too low. That means on a $100 million net PnL you're taking home $10 million for the team. Not enough imo.
Sr PM get 20%. The very best of the best become partners and own equity in the firm.
10% is too low for any PM at MM. I've only heard of that at MLP PM training program and that's for upcoming PMs with no team. Not Citadel.
You're saying a first year PM can't make $100mm at PnL in first year at Citadel @ 15% cut? You've gotta be kidding. Keep in mind that $15mm would have a big chunk in a 3 year vest. It's just a different animal when it comes to MM.
20% is PM cut. Partners get equity. Totally seperate topics.
Let's unpack this. There are a lot of senior PMs at Citadel who get paid out 10% NET of expenses - especially in GFI. This is a fact, I don't know how to debate it with you.
There is also an associate PM structure at a lot of these shops where the netting is done on a team level. Plenty of associate PMs (working under a senior PM) have deals where 10% payout would be good - so the senior PM takes 10% and the sub PM gets 10%. This is also a fact. Again, I don't know how to debate that.
What is a first year PM here? Coming over as a senior PM from another shop? An associate PM on the first year of their deal and first time managing risk ? Let's assume later. How many of these have made $100mm dollar pnls and gotten paid out 15% of that? I MIGHT know one but generally it is impossible. Imagine you got a 25mm drawdown limit (super duper generous for first year), you would basically need to deliver a 4 sharpe to get that 100mm at an acceptable vol - your first year as a PM... um?
Citadel vests bonuses over 3 years? Are you sure?
Ok, I see where the disconnect is. Full disclosure: I worked at Citadel (global equities or Surveyor) for 4 years. I won't disclose any further (when, which group, location) to maintain privacy.
So everything I'm talking about is GE/Surveyor. I never worked in GI, don't know pay structure, only talked to one credit guy in my four years there. So I have no idea how shit works there.
When I talk about new or junior PM, I'm talking about someone who has worked as an Analyst or Sr Analyst in the Citadel equities model and has managed capital already. A Sr analyst on my team had a $1bn+ book, which was part of the $3bn that the PM ran. In many teams, PM doesn't even run capital or just runs a center book, taking best ideas from analyst books to scale Analyst ideas.
I guess you can call some analysts Associate PM since some PM don't run money, but it wasn't an official title when I was there. These guys have been running books and know the process, risk model, etc. and can step in as a PM quickly. They've already proven high Sharpe or they wouldn't have gotten the seat. If they weren't a good analyst, they'd have capital cut and be fired. Happens all the time.
In this model from my personal experience, The cut is 5-7% for Analyst level, 15-20% for PM level. I'd never heard of 10% at PM level and nobody on other teams I talked to had a PM paid below 15% of PnL. Again, I'm referring to someone who came up in this structure, knows the risk model, and has managed a book and people (1 or 2 associates). Maybe GI pays 10%, I have no clue.
On the pay side, when I was there any bonus comp over $750k would start to be paid out as a mix of cash and investment in the fund that vested over 3 years. So let's say you're an analyst and make $50 million PnL for your team (some make way more). Your bonus is 5% or $2.5 million. Of that, you could end up taking $1.5 million cash and the rest goes into GE or Surveyor fund (which always make money anyways) and vests over 3 years. If u keep putting up big PnL, that money adds up. This is why Citadel can force people into 1 year garden leaves (nobody else can) when they leave the firm...because they have millions tied up. They either don't work for a year or their new form has to buy out the vested funds. I've worked at 2 MM since then and all bonuses have been 100% cash, so garden leave much shorter.
I hope that clarifies things. I think we were just talking about different things. I have no idea how quants, commodities, credit, or anything outside of equities works and things may have even changed on the equities side since I left.
Double posted. No idea how to delete. Sorry