How to Structure Bonus Comp for Analyst
I'm at a SM L/S sub $500mm AUM outside Chicago. Current bonus structure is a LSD % of PNL after a 4% hard hurdle rate and a high water mark. We've been short biased and had a huge year in 2022. We stayed short through 2023 and ended up with negative returns after Nov/Dec of 2023, so it looks like I won't see any bonus. But going into 2024, we've already made back all of what we lost at the end of 2023 and some. So it was just a matter of timing for two or three months. Seems like some bonus is justified, rather than waiting for a whole other year.
Do all L/S bonsues depend on year end results only? Or is there an alternative bonus structure that accounts for these short term timing considersations? For example, some bonus accrues quarterly or semi-annually when the PNL is positive and some clawed back if things are down temporarily. Waiting a whole other year for a bonus when the results were only temporarily impaired at year end seems unnecessary, because if we had ended the year on October 31st, I would have had a substantial bonus.
I know of nobody who does this... it's just the nature of the industry. The good news is that you're junior enough so they might throw you a small bonus (~ 50% of your base salary).
You will get something but don’t expect too much. The fund manager gets paid at end of year so do you. Luckily you’re so junior it probably won’t make much of a difference
Turn it around and imagine how you'd feel if after crushing 2022, your PM gave you a crappy bonus because hypothetically the fund lost money in Jan Feb 2023.
Heads you lose, tails I win is not sustainable not fair. Expect a low or no bonus for 2023.
you're saying this like my PM wouldn't use that as an excuse...
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