Hi All,
There are quite a few threads here discussing comp. and bonus, but haven't seen anything (at least through a quick search) regarding negotiating comp., specifically bonus and participating in carry/equity.
I have over 5 years experience and currently an associate, but have reason to believe I will get VP in the next 3-6 months. Right now I'm at 20% of salary, but I'm trying to prepare myself for what is reasonable to ask for and how some of you have gone about these comp structure conversations.
What has this group's experience been? How have your comp/bonus structures changed when receiving promotions?
Thanks!
What is the size of your firm? What type of investments (debt or equity) is the firm making?
Should of dropped that info in probably. GP (owner/operator) with $2.0b AUM. We generally do equity acquisitions, but in COVID have been making plays to acquire non-performing loans so we can make our way to the collateral through foreclosure. Tier 2-3 market, but almost all of our partners are institutional. I will say COVID has greatly impacted us, but I don't think that should be a limiting factor to a longer term comp. structure.
I think its reasonable to have bonus be at 100% here and get a nice raise. Sounds like your bosses extending carry but not be a norm for them and something they need to get comfortable with. Only so much pie to go around is probably what they will say.
I don't know if you're in a Tier I market but if so and notwithstanding COVID your bonus at Associate/VP level doing equity acquisitions should be 100% of base +/- 25% assuming no carry. Once carry comes into the equation, which is typically a VP-thing, you've got a lot more levers to pull and my sense is you can trade bonus for carry, etc.
Tier 1 market with 100%+ for bonus/carry is reasonable
I'm in consulting, and the bonus/equity stuff is over my head, but the most valuable thing in a negotiation like this is a better offer from another firm. It's an objective measure of your value on the market.
Of course your story is that you'd much prefer to stay where you are because you love the team and the culture and everything, but still, CREAM.
The downside is that you might be looked at as someone who's looking for other opportunities and not committed to where you are now. That might limit your upward mobility in the future at your current firm.
Just something to think about.
I don't disagree with that approach normally, but the asset class my company focuses on has been hit hard by COVID. There are extremely limited open positions in general, let alone at my experience level.
To expand on your point, the key in negotiations is to have leverage on your side. The more value you add, and the harder you are to replace, the more leverage you have. There are many ways to accomplish this but here are some examples:
1) You’re producing revenue for your firm that would be lost if you left
2) You posses specialized knowledge that your firm relies heavily on
3) You play a key role in processes that would be interrupted if you left
4) It’s a tight labor market and it would take a long time to replace you
So OP, if you’re considering negotiating your comp, you need to think critically and ask yourself how much leverage you have. Why would it be easier for them to give you a raise than to hire someone else for your role? That’s how I would approach this issue
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