What determines SM pay?
Any lean shop with 3bn+ AUM should on paper have enough unit economics to keep anyone. Is main variability in SM comp just willingness for CIO to lower take rate of GP? Is there any way to dilligence this especially as some shops have few formers?
Not in SM but have friends who seem to have massive variability in SM model holding seniority and contribution to PnL constant. Curious how this all works.
Is your pay discretionary? Then your PM. You could have killer performing names but EOD it comes down to your PM. If your pay is not discretionary and is formulaic then they'll let you know how you'll get paid.
Point is everyone in this biz is greedy. They'll keep you by giving you just enough but that's about it. Most SMs it's at the PM's discretion.
your performance (absolute and vs sector), fund performance, attribution (discretionary vs. formulaic or points)
it can be quite arbitrary - two people at different firms but similar AUM, AUM/IP, performance, everything - one could make $500k and the other $5mm and it does come down alot to PM willingness to share economics
What determines SM pay?
The PM.
/endthread
This is the only answer, and the reason why pods from a comp perspective are more appealing. Many SMs don't even offer tangible economics so even if the fund has a killer year, bonuses are completely up to the PM to decide on. And typically its enough to keep you around if you're valuable.
Naturally, the next question is, which SMs have the most flexible PMs with the best economics for juniors?
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