Bonus dilemma!

Guys,

I work at a boutique and am a bit worried about how my bonus is being worked out. I have been led to believe that it would be irrespective of the projects I have worked on or the revenues gained from such projects.

Are bonuses based on revenues or profits? I believe the M&I site suggests revenues... would be awesome if someone could shed light on how analyst/associate bonuses are calculated and how you guys know that you aren't made a fool of?

Thanks!

Comments (15)

Nov 13, 2012

Overhead of an investment bank is low enough to suggest that revenue and profit are pretty similar figures. (A reason bankers are "overcompensated")

Nov 13, 2012

anyone??

Nov 13, 2012

It will usually be based on what the street is paying and how much you could receive elsewhere if you were to leave...

Nov 13, 2012

I've worked at a boutique IB and a boutique HF and the truth is it never is irrespective of projects/revenues.

The smaller your firm, the more likely you are to get screwed as the decision making isn't institutionalized. When the firm is run by one or a few people, they are thinking about how they paid themselves the past few years. If things were lean (and they likely were) they are unlikely to "pay" you, the junior person, after they've taken on all the risk and suffered over the past few years.

At one place I worked, the bank's founder stated bluntly "it's time I get paid". At the HF, they framed it as "we will pay you based on your work, not how the fund does" -- at this time, the markets were hot and the implication was that if they put up 100% returns, I wasn't going to be a millionaire. The markets, of course, went sour and when it came time for my bonus, they said "great job, but you know our fund is down and things are tough".

It of course depends on you and what you could earn elsewhere, but everyone knows the hiring environment is still poor and therefore you have no real leverage.

So, I would suggest you prepare for the worst. You can push back a little if you get a bad number, but take a few days to really think about how happy/unhappy you are and what's the real likelihood of doing better elsewhere.

    • 1
Nov 13, 2012

why is this a dilemma!?

You are a price taker in this situation. Your firm will likely pay you what the believe you are worth as long as it's reasonably in line with the street. You are going to take it, say thank you and then bitch after hours that you're underpaid for how awesome you are.

twitter: @CorpFin_Guy

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Nov 13, 2012

There's no formulaic rationale for analyst and associate bonuses. If your bonus is under $40k, that is shitty. If its under $30k, I'd walk. These are also very conservative numbers, if they are fair it will be above that.

Nov 14, 2012
balls.mahoney:

There's no formulaic rationale for analyst and associate bonuses. If your bonus is under $40k, that is shitty. If its under $30k, I'd walk. These are also very conservative numbers, if they are fair it will be above that.

I disagree with this. Just picked a random BB, Deutsche, and went through the comp on this site with bonuses ranging from 40 - 52 for first years. Based on what I know this was roughly equal, maybe a little light for street this year?

If you work at a boutique, you should expect your bonus to be smaller than BB pay. If 40k is a shitty bonus then, I assume you mean that 40 - 55 is bad, 55 - 70 normal, and 70+ is good? Come on man.

Nov 14, 2012
PuppyBackedSecurities:
balls.mahoney:

There's no formulaic rationale for analyst and associate bonuses. If your bonus is under $40k, that is shitty. If its under $30k, I'd walk. These are also very conservative numbers, if they are fair it will be above that.

I disagree with this. Just picked a random BB, Deutsche, and went through the comp on this site with bonuses ranging from 40 - 52 for first years. Based on what I know this was roughly equal, maybe a little light for street this year?

If you work at a boutique, you should expect your bonus to be smaller than BB pay. If 40k is a shitty bonus then, I assume you mean that 40 - 55 is bad, 55 - 70 normal, and 70+ is good? Come on man.

I disagree with this. You should not necessarily expect your bonus to be smaller at a non-BB than at a BB. In fact often times it's the opposite to make up for a smaller base.

To answer the original question, I would look at what analysts at your firm got paid in the last few years and what your company's deal flow and closed transactions have been and use that to gauge how much bonus you should be getting. Although I agree with a previous comment that with boutiques it can be a blackbox...

Nov 14, 2012
PuppyBackedSecurities:
balls.mahoney:

There's no formulaic rationale for analyst and associate bonuses. If your bonus is under $40k, that is shitty. If its under $30k, I'd walk. These are also very conservative numbers, if they are fair it will be above that.

I disagree with this. Just picked a random BB, Deutsche, and went through the comp on this site with bonuses ranging from 40 - 52 for first years. Based on what I know this was roughly equal, maybe a little light for street this year?

If you work at a boutique, you should expect your bonus to be smaller than BB pay. If 40k is a shitty bonus then, I assume you mean that 40 - 55 is bad, 55 - 70 normal, and 70+ is good? Come on man.

I'd say bad and shitty are the same thing. $40-55 is in the range of normal for a first year and 100% of base is what I'd consider good. Some of the numbers in the company database seem spotty. Maybe my view is too narrow, but I'm basing it on what I was paid in my first 3 years and what I know other banks paid after speaking w/ other analysts I know.

For what its worth, I was at a non-BB and was paid above what large banks gave to analysts. On the flip side, they have had much better access to interviews than me... In a hypothetical situation, I would gladly take half the bonus I was paid in exchange for working in a strong BB group.

If you want to know any more details about bonus numbers I've seen in my limited experience, feel free to shoot me a PM.

Nov 15, 2012

Chaps,

Thanks for all the input. I am actually at a start-up IB in an Asian country (one of 8 employees) and have been told that my bonus would be around a month or two's salary. My background is typical BB material and I had to make the move here due to immigration etc. The guy I work with is Ivy League (as me), ex-MS and a really nice guy (the rest of

But when it comes to compensation, I am hugely suspicious of what's going on. Bearing in mind that it's a start-up, only the partners know what fees they charge. They take great effort in making sure none of us know. For instance, we are working on raising a fund and the pages relating to find size, structure etc is hidden from me. I am only used for bit covering country macroeconomics.

Also, the partners are pretty rich. I mean, they come in fancy cars, take a week off every month to go abroad. Most of them are taking 3 weeks off December for xmas hols (and flying off to some exotic location).

I don't want to be comparing myself with them, but am wondering if I am being overly sensitive to this? I mean, I would have expected my bonus to be tied to the projects I worked on and the money that these projects generated (as opposed to a something just thrown at me?)

Nov 15, 2012

anyone?

Nov 16, 2012

anyone?

Nov 20, 2012

It sounds like you're in a very unique situation then, so I'm not sure how much leverage you have... The numbers you've quoted though for an expected bonus seem very low for any IB. If you can't negotiate to try and get your number closer to what is paid by "the street", you wouldn't be out of line if you wanted to explore other opportunities.

Nov 21, 2012

You work for an investment bank that is raising its own fund?

Bonus - is the bank successful? Is your bank closing deals? If not, it's expensive to keep the lights on, so why would the founders pay you out of pocket any more than the minimum to keep you there?

If it's a good situation, as one of few employees you can really get paid down the line. In the near-term, the business has to be able to support itself, then build up a cushion, then your bosses will think about paying out stronger bonuses.

What a peer is getting paid on Wall St. is irrelevant since it sounds like there's no threat that you'll leave to that kind of an offer.

Jan 3, 2013
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