Originating as a VP?
As the title states, I'm in my last year as a VP at a well regarded firm (think bulge or elite boutique). While there are a few balls in there air, there are a few transactions that, if consummated, I will have a legitimate claim to material revenue credit. (Originated sell-side through a relationship, originated buy-side though a relationship, facilitated two bilateral discussions, brought multiple buyers to the table for a sell-side). In all cases there was no preexisting MD relationship with the client / investor I brought to the table.
How is this typically treated in terms of comp / promotion cycle?
Based on previous WSO threads, here are some insights on how originating significant transactions as a VP might be treated in terms of compensation and promotion:
Revenue Credit and Compensation:
Promotion Considerations:
Internal Recognition:
Firm Policies:
In summary, originating significant transactions as a VP can positively impact both your compensation and promotion prospects, provided your contributions are recognized and aligned with the firm's criteria for advancement.
Sources: Promote Question, Is this associate compensation competitive?, Q&A:Commercial Banking SVP Ask Me Anything, Comp/Culture/Hours etc at Tier 2 Consulting Firms?, Please Help Me Understand Corp. Finance / M&A at the Big 4
Depends on the outcome.
If you are in a well structured firm and feed are earned
- md will take all credit
- your comp will be in good bucket, but you wo’t get a top up aligned with deal fees…
In any case, if you are up for director promotion, this is useful. I got a couple of mandates when I was at your level, and leveraged that for that promotion. No one cares if it doesn’t deliver a deal at that level, but it shows that you can think like a grown up.
Obviously if the fee is $10m, it’s worth some smart internal discussions with the powers that be - your boss will naturally claim credit
You're not going to get a comp slice like an ED or MD.
However, good for your director promo and should therefore be a sure thing.
At my prior MM firm, there was a $25k "deal origination" bonus that was given to all positions VP and below if they brought in a deal. If the deal closed, you received a second $75k "deal success" bonus - so you could net out at $100k in additional comp (on top of your existing bonus) if you did well.
I always thought that seemed...fine. Given the sharp elbows that typically go into calculating fee ownership between senior bankers, this was probably the path of least resistance for making sure an MD didn't firebomb a VP's car or something.
Got top end of bonus and low single digit % of deal fee as extra top up for finding what amounted to 8 digit fee event. Obviously should be more but we are price takers here.
My situation is eerily similar. How did you handle the bonus conversation? Did you have to push for the extra top up or did you just take what they give? Unless my bonus egregiously undervalues my contribution, intuition tells me to take what they give me and not create unnecessary drama. I've made it too far to risk the opportunity for a Director promotion.
Did you have other deals in the pipeline where you potentially had claim to "revenue credit"? I've have a few similar size proprietary opportunities that are all relationship based, but feel its almost better to put them on ice until I can get actual revenue credit for those. Appreciate any insights you have.
My 2c living as an Director (ignore title) in a more troubled spot (after lateralling downmarket for comp reasons) is that just be long term greedy - eventually when you hit MD these will translate to real dollars and you won't need to worry about this level of granularity. Obviously toot your horn as much as you can but don't be surprised if you don't get any extra money.
My view: Have the conversation BEFORE you bring in the deal. And use that as leverage. If its already in then you have no negotiation power
I personally would push for economics. If that causes and issue for them, F them. You did the work. You should get paid. I dont want to build a career at a place that will keep yanking economics from me. Im trying to get paid
That isnt the right posture for everyone. But Id rather try to make money today than years from now
If someone whether an MD or a VP tried to hold comp over my head before bringing in a deal, we would pass on the deal and they would be out the door.
Also, when you’re a VP the expectation is you get paid whether you or your team generate revenues. That’s fair but it also means your are not levered to the upside in the same way.
If this was someone in my team, I’d probably make them top bucket and throw 100-200k above the top bucket and it probably earns them two years of that treatment not one. I’d also put them on the fast track to MD and try to cut the Director tenure to two years. Much of this depends whether the origination was because you had content and content based relationships or more random (obviously the first is a lot more valuable and repeatable).
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