Based on what I've heard about associate bonuses, the ones in S&T were a lot lower than IBD (for obvious reasons). It seems that top tier in S&T was closer to bottom bucket in IBD. Now, my question refers to the analyst bonuses to be distributed in summer 2008. There's been speculation that even the analyst bonuses will be smaller in S&T vs. IBD.
I realize that analysts are generally 'protected' by the training programs, but if every firm on the Street pays S&T a range from 40k to 70k, and IBD is 50k to 80k...could this happen?
There is no reason for S&T analysts to get paid the same as IBD analysts. While everyone for S&T analysts will probably pay in the same band, it could easily be a lower band then IBD. It could be 25-50k for S&T and 70-90k for IBD, or something else equally different. This always depends on the street, and how valuable each part of the firm is during the year.
You will be extremely likely to see cuts to S&T bonuses for analysts in an environment where they don't have a ton of exit options. With the collapse of numerous hedge funds, and certain other normal exit opps for S&T people at lower levels, the need to pay out large bonuses from a tight pool is lessened.
My 2 cents, but there is no reason S&T will get paid the same as IBD.
What about attracting and retaining talent - keeping them from trying to jump to IBD? Isn't this a similar issue as to why banks don't pay different bonuses to analysts w/in different IBD groups? To keep analysts from trying to jump to the 'hottest' group. If there's money to be made in S&T, I find it hard to believe they'll let lower analyst bonuses (very nominal to comp expenses) let good talent get away from these businesses.
As I said, with regards to attracting and retaining talent, the street will determine levels, which removes the ability to move to another S&T job, other exit opps will, probably, have declined. Also, comp is based on personal performance and group performance much earlier in S&T. So, while your "training" or rotation comp when you start may be lower, if you believe you will be good at your job and get assigned to a good desk, your future comp has nothing to do with that first bonus. In S&T, there is incentive to move to the hottest group at an early slot, unlike IBD.
The statement about moving to IBD is kind of odd, S&T and IBD usually attract very different people. Both are smart, motivated, and interested in finance. However, S&T and IBD analysts live vastly different lives, difference schedules, different expectations, etc.
I didn't say the bonus would be half as much in S&T, I just said that it easily could. If exit opps are tighter, and profits for trading are lower, there is every likelihood that S&T analysts will get less than IBD analysts.
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