Cancelled Bonuses
My firm announced that bonuses are cancelled for 2020 (MM). I'm sure a lot of firms won't come right out and make the announcement, more of a surprise come bonus time when you don't get paid but is anyone else out there hearing rumblings at their firm about the same?
Nobody should be expecting a bonus in 2020. If that changes your comp calculus, then you should decide what you plan to do about that.
The "bonus" for this year is continued employment in 2021.
Why does this have MS? this is 10000% accurate
Because it doesn't add anything to the conversation. Everyone already knows bonuses probably won't happen this year and we're lucky enough to still have jobs. The question was whether or not anyone else had gotten the news not for captain obvious over here to stand up and be useless.
??? VAST VAST majority of banks will be paying juniors bonuses, albeit very likely low (comparatively).
Hard time believing any EB or BB, and I gotta say basically all major MMs, would give a firmwide "bonus cancelation"
Frankly OP, find a new place to work when you can
This seems like weird timing. Why would you tell people this in advance? The ideal time to tell people firmwide bonuses are zero is on comp discussion day at year end.
Honestly, this is very abnormal and not really logical. My guess is that this MM was not performing well to begin with and having the excuse of coronavirus gives them an "out" to cut pay- its a really shitty thing to do, especially because its so early so they have been waiting for an opportunity to break the news to you guys. I have spoken with VP-ED level at BB banks and they say that bonuses will be discounted this year, but there's no such thing as canceling the bonus at least for the BB banks. Sorry to hear this at your MM though
No visibility on that yet but to be honest the situation is so fluid across the economy right now any bank can have the intention to honor offers but make a last minute call to cut or cancel incoming hires. Best of luck to you.
I am pretty sure it is William Blair as my Analyst Friend just wrote me desperately
Lol why does this seem like something out of like Pride and Prejudice or some shit like that.
“Did you hear which one of the neighborhood boys won’t be making it back from the war?”
“I am pretty sure it is William Blair as my gentleman friend just wrote me desperately”
My dearest Penguin,
It is with great trepidation that I write to you now, in my darkest hour of need. My dreams have been troubled as of late; I am afeared that my discretionary bonus, once promised by the honourable William Blair, may never come to pass.
Wow. Nobody should be working 80 hours a week for their base.
Can confirm this firm isn’t Blair. This post is about BMO. Source: current analyst
Lol, simmer down. Must be your first recession.
It’s tough/tight for analysts I’ll agree but if you didn’t leave beyond your means you should be ok / lucky to have the job with such low activity right now. $150K-250K translates to $7-12k in net cash pay for most associates and VPs. If you rented Apts that cost more than 3-4K It’s on you. Even for analysts, your monthly paycheck should be $4.5-5k. After $2k in rent, $500 in groceries and max $1k in student loans you shouldn’t be going broke. Def not over the FL workers w $265/wk unemployment (ok $600 more now)
Can someone confirm the bank?
Well it's my post so I'm the only one who can confirm the bank and I'm not going to do that. This was meant to be a discussion to see who else might be getting hit, not who done it.
You getting MS for not wanting to name your bank shows how all of these "Prospects" have infected this site.
Either KPMG or Houlihan
"Top MM" -> gotta be Houlihan then if those are the only 2 options.
No way this is HL. They have one of the best restructuring practices around and the entire RX department would leave tomorrow if they got no bonuses this year. Any bank on the street would love to hire the HL restructuring team so there is no chance they will not be getting bonuses or else they would all lateral to Moelis/Evercore/etc tomorrow. KPMG makes way more sense (and for everyone else on this forum freaking out, KPMG is very different from your average bank so don't go crazy yet).
Makes sense to cancel the bonuses but MDs out there also need to take their foot off the gas pedal.
If there is nothing actionable right now and your team isn't getting bonuses, don't work them 80 hours a week in the middle of this shitstorm.....and I know for a fact that a lot of this BS is going on. MDs are freaking out and pitching tons of 1 in a million chance deals and keeping guys up all night on totally unactionable pitches.
.
.
This is my first posting and I'm finding the commentary that's going on in this thread quite interesting to put it politely. I'm also bored so I figured that I'd post something. Having started in the industry just after the 87 crash I remember when a lot of the major firms were acquired by banks or disappeared.
In good times bonuses are good and in times like this they aren't.
Some of my longest hours were after LTCM imploded and after the internet bubble burst and bonuses sucked or were zero. It's the nature of the beast and the bonus pools are for the most part controlled at the top of the house and funded by profits. I realize that I'm ancient and the industry is constantly evolving but right now the thought process at the top is how can expenses be minimized without turning to mass terminations. It is not around maintaining bonuses. If this were 20 years ago the terminations probably would have started a couple of weeks ago. Even most people under a direct drive model of compensation will see a significant hit this year and maybe going forward. What is going on now is structurally different and pretty much hitting every sector and part of logistic chains. It sucks but it sucks everywhere right now.
I understand your viewpoint, but I find it to be a relatively dated view.
Compensation in the 80s / 90s / 00s was meaningfully more variable in both directions. However, comp trends over the past decade have been unfavorable with meaningful risk to the downside in bad years and little upside in good years.
Also, it would be intersting to understand COL-adjusted base pay over the last thirty years. As an NYC resident, I know that my Director-level IB base pay barely covers my living expenses throughout the year. Year-end "bonuses" are relied upon by bankers to make them whole. I suspect that very few people would choose to work on Wall Street to play for base pay.
Then you're doing some pretty poor financial planning. Leaving aside the fact that $275k "barely covers your living expenses" despite being 4x the average NYC income, you're budgeting based on non-guaranteed income. Would you advise someone to create a personal budget that was highly dependent on their investment returns? While IB bonuses are a bit more predictable than the S&P, they still carry risk.
Reading the comments on this is quite surreal. "no one should work 80 hours without a bonus" "they can't afford not to pay junior analyst" WE DESERVE OUR BONUSES!!!
Now read: Y.O.U D.O.N'T D.E.S.E.R.V.E A.N.Y.T.H.I.N.G
We are about to enter a monster recession, what the fed is doing is alchemy and it could blow up the whole lab. What do you do for a living? Let's break it down - the basic function of a bank is to loan money to people. A lot of those people won't pay back so you won't get paid back. If you don't get paid back, you don't have money you lose money - if you don't have money you can't pay bonuses. It's really that simple. The next step is for you to actually lose your job - you shouldn't be worried about a lack of bonus in this environment - worry about your fucking job.
We don't give a fuck that you worke 80 hours per week. Some kid in Indonesia is probably working 120 hours in a mine and can't feed himself. There is no fairness in this world.
In 2008 I was given a $10k bonus - my boss told me - you are really lucky we are giving anything this time. And he was right, because most of my mates for the next two years were getting fired with no bonus and no base and a shit economy to find anything.
What pisses me off the most is that your base salary is already OUTRAGEOUS for what you do. Be fucking happy you have that. They were multiplied by 2 taking into account inflation for when I was a junior.
To OP: to be honest this is not that bad - at least you know for sure you won't get a bonus and can release the gas a bit and stop stressing about it this year.
A bit of a rant - but some of the comments just drove me to it. Anything you get this year - is exactly what it is, it should be considered a BONUS and you should be damn happy to get anything (unless of course you are part of a boutique that only does restructuring and will make a shit load of money, unfortunately if you are a restructuring team in a big bank - you have to feed the rest of the machine and there won't be much left for you)
It isn’t that far off base, although if you focus strictly on investment banking with a standard 2 year program that is less of a thing but still a thing. Recruiting and retaining top talent is tough, while banking at the junior level is a bit more of a mechanical “crank work out” finding good people is still tough.
Don’t get me wrong, analysts are replaceable (as are most employees), and while they are harder to replace in PE, HF, etc for the most part they are replaceable.
That being said, there are a few things to consider:
1) what are your competitors doing? If competitors pay bonuses and you don’t, your analysts will leave, that sucks.
2) what is your brand at the schools you are recruiting at (tied to #1 above)? If you give 0 bonuses and others don’t, your brand is shot. Summer analysts and first year analysts will talk to their friends, and no one wants to work at the bank that is getting crushed and treating their employees “poorly”.
3) how expensive is it? Couple 1 and 2 from above and then diff that to the $ cost. Paying junior employees a bonus is relatively cheap. Senior employees are willing to take more of a hit because 1) they can afford it and 2) their comp is more variable and if they can get through this they will benefit, they need junior employees to get through this.
4) how is your comp structured? For most senior employees comp is much more tied to equity. So when (if) things improve they will benefit from this, they capture the upside and more of the downside too. Junior people are all cash and for the most part “need” it (this is the upper class “need”) so with the senior people you can just give more equity/deferred so that you have more cash available.
That being said, I expect bonuses to be hit this year.
To those saying that analysts are acting spoiled and entitled for being furious about the prospect of not getting bonuses, I strongly disagree. Why?
In the end, it’s true that many analysts are leaving anyways and it’s not like not paying bonuses should have huge repercussions. But they should think about the long term impact: A) From my end, I’ll make sure to do everything in my power to make sure that my future firm never does business with my bank. I’ve been extremely loyal to my bank and my team, and I’m thankful for having the opportunity to have worked there - but if they decide they want to save $50-100k by not giving me a bonus, I’ll be happy to save them millions in future revenues too. Loyalty goes both ways and how you treat people should have consequences, good and bad. B) If your bank cuts all bonused and others don’t, good luck getting the best talent. And this will drive even more smart people from banking to something else.
Just my two cents. Would love to hear if people agree / disagree.