Bonus Implications for Principal / VP Laterals
Hi all - if you are at a shop where a significant portion of your all-in comp is the year-end bonus, lateraling in the middle of the year will mean there is a substantial accrued bonus that will not be paid out. Is it reasonable to ask the fund extending you an offer to match the accrued bonus? Or is it typical to unfortunately leave this money on the table? I’m assuming this is case by case but just wanted to get a sense for other folks’ experiences.
Based on the most helpful WSO content, it's absolutely reasonable to ask the new fund to match your accrued bonus when lateraling mid-year, especially if bonuses form a significant part of your total compensation. This is a common practice in the industry, and many firms are aware of this dynamic. Here are some key points to consider:
Industry Norm: It's typical for candidates to negotiate for their accrued bonus to be included in their sign-on package. This ensures you're not penalized for making a move at an inopportune time in the bonus cycle.
Negotiation Strategy: Be upfront during the offer discussions. Highlight the bonus you're leaving behind and frame it as a standard part of your compensation that you'd expect to be matched. Many firms are willing to accommodate this, as they understand the competitive nature of lateral moves.
Case-by-Case Basis: While it's common, the outcome often depends on the firm's policies, the urgency of their need to hire you, and your leverage in the negotiation. If you're a highly sought-after candidate, you have a stronger case to push for this.
Alternative Compensation: If the firm is unwilling to match the bonus outright, consider negotiating for other forms of compensation, such as a higher base salary, additional equity, or deferred compensation to make up for the shortfall.
Timing Considerations: If possible, try to time your move after receiving your bonus. Some professionals strategically plan their transitions to avoid leaving money on the table.
In summary, asking for your accrued bonus to be matched is not only reasonable but also a well-accepted practice in the industry. Just ensure you approach the conversation professionally and with clear justification. If the firm values your expertise, they'll likely work to accommodate your request.
Sources: Minimum Time Before Lateralling?, https://www.wallstreetoasis.com/forum/job-search/negotiating-offer-before-during-and-after-interview-follow-up?customgpt=1, 2 successful years at the firm, 2 years of 0 bonus and minimal pay rise, Arguing for bigger bonus?, Is this associate compensation competitive?
Bump
Think it depends on how much leverage you have with the new fund and how badly you want to move. Making the ask is risky but possibly acceptable if they absolutely love you.
There are other ways firms will navigate this (ie; give you a full 1-year bonus instead of a pro-rated bonus) but it all depends on leverage you have. Firms if they want to hire people who currently are in decent seats understand this is a cost of doing business.
If you’re 10 months in and with an extra 2 you’d have your bonus maybe they’d help you out or tell you to quit later. In your situation, not so sure. The reality is that these processes take a number of months to play out usually. So you must’ve started talking right after your last bonus. At that point you had nothing accrued and you knew you’d leave, so I wouldn’t feel much sympathy. The other question is whether they specifically tried to lift you out of your seat or if this was an open recruitment. Lastly, is your new fund better than your old one on paper? If so, expect zero sympathy
… but you can always ask?
The supply/demand characteristics of the labor market are not in your benefit. You shouldn't have that much leverage, but it doesn't hurt to ask. Before you do, I would think through the entire bucket of economic opportunities they can provide (e.g., ensuring you can re-fi your co-investment loan), and try to push on the buckets that may mean more to you from an economic value perspective, then them.
Have moved midyear previously and the firm I moved to offered a sign on bonus plus a full year bonus to make me whole
Did you have to ask for the full year bonus to make yourself whole? Or was that already included in the offer letter? Can you also share directionally what size fund this was?
$500m-1bn fund but part of a larger platform. This was in 2022 for some context. I was upfront about this being a consideration when we entered into comp discussions and specifically asked them to come up with a solution to make me whole
I’m surprised at the answers.
It is standard operating procedure for the new firm to give you a full year bonus no matter when you started.
If you start at the beginning of the year, then you will have been with them for basically a year, so obviously you get a full year bonus.
But even if you joined in the summer or fall, of course the expectation is they would pay you a bonus as if you worked for them all year.
Not sure what the hell everyone else is talking about.
This is the correct answer, I’m equally baffled by all the other responses on this thread.
I’m positively surprised by this. I thought it was common to receive a stub bonus if you joined intra-year? That was the case for my associate program and what I’ve heard for 2 other friends who lateraled at the VP level (6-9 months into the year each). Maybe they got stiffed though.
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