Can your bonus be more than the target range they give you?
If your bonus is 50%-75% of your base and the firm does really well along with you doing well, would they always cap your bonus at 75%?
Alternatively, would they pay you less than 50%?
Yes and yes.
Bonuses are based on performance, both personal and company.
Your company could do really well, but you are a shitty performer and get 0. Your company could be doing horribly, but they make the decision they want to keep you so you get an outside bonus.
Ah, so they would never pay you more than the outlined range but they could pay you less
Think of it as a distribution.
If you are a 3 out of 5, you get 50%, if you are a 5 out of 5 you get 75%, if you are 1 out of 5 you get near zero.
There is no incentive for a company to go above the range unless it was just a really, really good year (and you were awesome) and total comp is above everywhere. Most likely, what happens is as a junior they keep you in the range, but that means that even if the company is doing badly, you still probably get paid. Less risk downward, less up potential.
This probably depends on how bureaucratic the firm is. I’ve received bonuses higher than my target, but also have heard from friends at other places that they get capped
I mean if firms policy is say for example a 10% bonus, that is really low but what if it's low by design? This way, they can all thump their chest end of the year and say they "beat" the bonus targets when they give out 20% bonuses. So it does not matter if the bonuses are above or below the target range they tell you to expect, bigger question is if the bonuses are at or above market.
So this is clearly very firm by firm dependent. The larger and more 'corporate' the firm, the less I'd say the chance for bonuses to venture outside of the stated ranges, as doing so would require a lot of approvals and basically make it hard (if not war) between departments/managers wanting to 'over-bonus' people. Smaller firms, less corporate structure, and thus more discretion... well anything is possible. I think the probability of 'higher' will be greater for the higher-ups in any scenario, analysts/associates are generally never that valued to merit such special consideration (there the rewards are promotion out of those ranks).
To the 'below' range.... yeah.... that can happen to any firm that is in any form of cash crunch or expected cash crunch. To be clear, if a firm violates its norms for bonus payouts on the downside, you can expect people to leave, starting with the top performers usually. Thus, many firms will really fight hard to not give less than the minimum on expected or normal payouts.
Bottom line... pay is almost always a discretionary matter, just like your continued employment! But, the social/political as well as financial considerations come into play. Like, if they 'over' bonus one year, then why not every year? Or if you justify for one person, how do you not justify for all? Thus, I'd expect everything to be kept in the stated guidelines and norms like 90%+ of the time. Can their be exceptions... of course, just can't even begin to tell you how to predict such!
are you at a MF or other large shop on the investment side? 50-75% bonus for a 1st year seems high
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