Guarantees at multi managers
Hello,
I would like to get a better understanding of how guarantees and sign ons work when joining an MM as a PM. There have been some comments on this in various threads, but I thought it might be good to post this as a targeted question.
I am not talking about the dozen million dollar guarantees that we are reading about on BBG, which I assume are for very seasoned PMs, but rather for more junior PMs.
Say, someone is currently a sub PM moving into a full PM role at a new firm. Last years comp was around 1mio usd, half of which deferred. What would be market for guarantee and sign on in this case?
Also, I would like to understand how these sign ons or guarantees would usually be structured in cases like this. Would it likely be a large one off payment when joining (Subject to the standard clawback when resigning within x years)? Or would a guarantee be more common? If so, would you still get your guaranteed bonus if they fire you before ?
I was in a similar situation - individual track record of 1 year as a subPM, 5 years of analyst track record prior with some PL linkage. I didn't do the "optimal" negotiation path of getting multiple pod offers and pitting them against eachother as I had a specific team/firm that I wanted to work within (and probably took a discount for) where I had worked with senior managers before and trusted them.
Comp was structured as:
- Deferred fully paid by new firm (roughly equal to 1y of expected comp) upon starting.
- Guarantee of last year's comp as lump sum paid EOY1 (with clawbacks). This was worded as payable if not fired for cause prior to year end, and could be clawed back if I left within two years. Given I had a lengthy noncompete, this was largely to offset one year of lost bonus income.
My offer was probably slightly below market given the circumstances above. I think one could get 2-3 years of floored comp depending on competing offers. Deferred is almost always fully covered, with forward looking guarantees structured differently firm by firm.
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