Are EBs going to raise base???

I know there was a previous thread about this but almost every single BB and MM has raised their base salary. Are we going to see any movement from EBs?? Comp is one of their major pros so it's a bit wild that almost every one is now paying the same/lower base than most other banks.

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Comments (83)

  • Analyst 1 in IB-M&A
Jul 21, 2021 - 4:14pm

Not an EB, but William Blair hasn't raised either. Seems as if the banks that historically paid more are the ones lagging the market now (at least one base), which just doesn't make sense to me. 

  • Analyst 1 in IB-M&A
Jul 21, 2021 - 4:27pm

My hope is that they're waiting to see where the market settles (which seems to be $100k first year now) and then slightly out edge them, similarly to how everyone moved to $85k a few years back and then EBs bumped to 90ish on average. 

Could also be that they're just tone deaf and don't understand how much it hurts juniors to feel unappreciated when all their friends from other banks are making more. 

That being said, is anyone actually going to lateral from an EB because they're making $15k less base than the guy working at UBS or Piper Sandler? I'm sure total comp is still higher at the EB, and I think 15k is probably just low enough to not even justify the effort of lateraling if you're reasonably happy at your current bank. 

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  • Analyst 1 in IB-M&A
Jul 22, 2021 - 3:08pm

Haven't been around for a bonus cycle left but its a bit complicated:

first 6 months- 85k base followed by ~35k stub bonus

next 12 months- 90k base with an actual bonus (heard anything from 50-90k+ here?)

next 6 months- 95k base with another stub (35kish again)

Comes out to 180k base + call it 140k bonuses over 2 years, so comes out to around 160k/year over the two years. Before base raises this was was actually very high (pretty in line with some EBs, ahead of anything I've heard from a BB). More in line with street now if they don't raise base, but if they bump base to 100k then getting up to close to 200k a year is within reach. 

  • Intern in IB-M&A
Jul 21, 2021 - 4:25pm

My guess is that if they don't move soon they'll start bleeding junior talent left and right 

  • Associate 1 in IB - Ind
Jul 21, 2021 - 4:28pm

I think that's a strong statement until we see what total comp looks like. If total comp doesn't increase with base, then I think EBs will still be a top choice. I'd rather take the risk to make more and have a better experience than take a lesser bank for an extra 25k base.

  • Analyst 1 in IB-M&A
Jul 21, 2021 - 4:33pm

Totally agree we need to see what actually happens, but just to give one datapoint, Harris Williams raised to $100k A1 and said bonus numbers are staying the same on a percentage basis. Assuming a 100% bonus (which is probably a bit high but not out of the question for a MM like that), you're looking at 30k comp increase first year, which I really think will close the gap between a place like HW and an EB. Not saying anyone is going to take HW over Evercore because of this, but I think for EBs to keep their reputation as the absolute top comp in IB they would need to move. 

Jul 21, 2021 - 5:03pm

I'm with you on this. Maybe I'm not understanding you completely or just noting that if MS/GS do 100 and 175 then I think it's possible and/or more likely than not that EVR and maybe pjt and the others  go to like 105/110 and 180/185/190 maybe for the analyst and associate base. Maybe CVP even tops that. Just hypothesizing though, I still think it's possible that none of them raise at all for the time being and maybe not for a while

though your source is likely stronger than mine…

  • Business School in IB - Ind
Jul 21, 2021 - 5:14pm

I think the EBs will follow what they have done in the past relative to BBs.

For example, Centerview has always paid a lower base but much higher bonus.

Evercore pays higher base and close to 100% bonus.

Lazard pays the same base as BBs but the bonus is higher.

So my guess is if 100k/175k is the new An1/As1 street base, CVP will be below, EVR a little above, LAZ match.

Does that make sense?

It is possible EBs like LAZ and Moelis take the opportunity to pay up like EVR or down like CVP. Obviously total comp number is what matters the most but most people want a higher guaranteed number.

  • Associate 2 in IB-M&A
Jul 21, 2021 - 5:24pm

It's hard to say because in the last cycle, EBs were well above BB ($150k vs. $125k almost across the board except LAZ). Then when BBs raised to $150k, EBs all responded differently (i.e. Moelis stayed at $150k, EVR went up by just $10k to $160k).

Obviously, if MS/GS raise to $175k, EBs have to at least match, but there's a decent chance that EBs won't jump that much more than BB

  • Analyst 1 in IB-M&A
Jul 22, 2021 - 6:22am

Trying to decide whether to stick around at my EB or leave finance in the next 6 months. A big raise in base with a commitment that bonus levels will remain at a similar % would make my mind up for me. Pay cut in leaving would be too big to justify 

Jul 22, 2021 - 8:06pm

How would you know if you don't know where he's going?

path less traveled

  • Intern in IB-M&A
Jul 22, 2021 - 2:11pm

During the Moelis earnings call yesterday Ken was asked about the "war on talent" and how comp for juniors will be assessed at the firm going forward, he more or less answered saying "Hiring a lot more junior bankers will help reduce the workload and as a result, chasing the street by increasing base would be silly". So I think more independents will take this approach by hiring more, higher offer percentages, and still a little higher than street pay.

  • Intern in IB - Gen
Jul 22, 2021 - 2:15pm

This doesn't make much sense to me. Why would you go out and hire another employee and pay them an additional 85k base + bonus when you can keep headcount the same and just boost total comp by 30-40k

Jul 22, 2021 - 2:23pm

Hey I also heard his answer on that earnings call and to me it sounded like he may be increasing salaries rather than him saying he didn't see the point. I think as they try to continue to hire, as long as he said the revenue number holds up, he isn't really looking to pick up margin on the comp ratio line, so there seems like there would be more money to go compensation for juniors. Especially since he said they have raised their feed and tried to be picky about which business they take on to do. Obv still tbd but my feeling from earnings call was that he may be leaning towards raising rather than holding steady or decreasing effectively but still tbd

  • Analyst 1 in IB - Gen
Jul 22, 2021 - 2:29pm

To avoid intern conjecture here's the raw transcript: 

"Michael Brown -- KBW -- Analyst

Okay. And a follow-up on your comment earlier. You mentioned war on talent. We're out [Technical Issues] across Wall Street and [Technical Issues]. So it appears that you really across the entire [Technical Issues] out of the pyramid there. What are you doing to kind of proactively retain talent? Are there actions that you need to do here or...

Ken Moelis -- Chairman and Chief Executive Officer

I don't know if that's me, but you're fading. Is that me or is that everybody? I'm going to answer the question what I think you said, because I think some of it faded. So I should say it's a war for talent, because I think some of the periodicals actually do report that it's a war on talent, but it's really we're not fighting the war on our talent, we are fighting war for talent. And we are trying to do all sorts of -- we are hiring as many people as we can to -- in the junior ranks, especially to take the burden off you can imagine. I think on this $360 million revenue, we had over 180 fee events. You can imagine that's -- it's a lot of revenue on the talent. They're doing a great job.

We are doing things. They're numerous, though, and I don't want to go into them all, maybe check it, do it offline. But we are trying to make life better, easier, hire more people, give protected time, of all the things that you would try and still satisfy clients and make sure we get great work product. But yes, we are doing that, and that's one of the reasons why we did not change our comp ratio yet or may not. I mean, it's a time to keep your talent, there's enough happening out there. And one of the key things we want to do is have a great motivated set of workers."

  • Analyst 1 in IB-M&A
Jul 22, 2021 - 10:36pm

Not an EB per se but is often considered to pay closer to them at least compared to larger banks that lend, is Jefferies in the mix here? Not sure who they are benchmarking comp against since it's always difficult to bucket Jefferies in any traditional category but currently they pay below direct MM competitors like Baird (110k A1), RBC (95k), direct BB and EB competitors like UBS (100k), DB (100k), PWP (on an all in basis), less than upstream competitors they are specifically targeting to take market share from, Barclays (105k), CS (90k, for now). Are they waiting on the EB's to move? If anyone has any more info and can chime in here, but I can't possibly see them not raising comp soon since they have traditionally paid above BB but below top EB. People will lateral out in this market otherwise. 

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  • Intern in IB - Gen
Jul 22, 2021 - 10:42pm

Did you just say PWP is a competitor with Jefferies, DB, and UBS? Did you see the 1st half league tables? PWP had larger m&a deal volume (by total market value) than MOCO and PJT combined.

  • Intern in IB-M&A
Jul 22, 2021 - 10:46pm

Agree, I don't understand al the PWP disrespect on this forum. 

  • Analyst 1 in IB-M&A
Jul 23, 2021 - 12:01am

Um, yes. Thanks for the bombardment of MS from interns that have very CLEARLY never worked more than 2 months on the desk based on the reaction to my comment. If you actually worked full time at PWP you would understand this is true and is a testament to jefferies' extremely rapid growth over the past two years than it is a knock on PWP.

PWP frequently competes on MM sponsor mandates as well as large cap and mega large cap deals. The have a very similar business model to Moelis in this regard, however Moelis plays down market more than PWP does. In reality, nearly all EBs ex PJT and CVP and to an extent Evercore compete on MM deals particularly in the range of 700m-1.2b deal size. This is Jefferies' wheelhouse and they constantly pitch against EBs for these deals especially in healthcare services, industrials, and tech. You specifically mention larger m&a deal VOLUME than MOCO and PJT combined. Yes, exactly. This means they are playing down market. Which they are. This is not a knock on PWP. The comparison is because Jefferies is doing well. And yes, Jefferies is a direct competitor to PWP and especially Moelis on their MM deal volume strategy. 

  • Analyst 1 in IB-M&A
Jul 23, 2021 - 10:45am

I find it hard to believe the EBs will let BBs like Barclays and Citi pay a higher base than them for long. Maybe I'm just optimistic though. 95 -> 110 would be pretty sweet for my day-to-day life.

  • Intern in IB - Gen
Jul 28, 2021 - 2:42pm
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