How Did Covid Affect Your Bonus?

Wanted to start a thread to see how everyone else's firm is reacting to Covid and how it has affected your bonus, Has your bonus been unaffected relative to previous years, or have you seen a significant decrease? My MM firm is down about $10-$15k at AN level yet hours have been just as bad, if not worse.

 

Curious to hear what others have said. Friends at my previous bank are echoing the same sentiment of being ~$15K down from last year's comparable bonuses at each bucket. Heavy Lev Fin shop so may differ from M&A boutiques.

 

Lets just say I did the calculations if we don't return to on-site client travel and, tax-free, all travel perks included, I am losing $39k+ -$42k+ (assuming some travel with personal vehicle reimbursement).

Not including the expected bonus, so probably $50-$55k total I lost this year.

Morale is shit, lots of people on the Advisory side within my age bracket (early to mid 20s) that I talk to are starting to look towards side hustles or are flight risks.

 

Can confirm, all Big 4 offices in my region declared that no bonuses would be paid for FY20 only 2-3 weeks into confinement. They also laid off about 5% of the Financial Advisory staff within the first month. There were subsequent, smaller waves of layoffs. Promotions are also delayed at most big 4s, and year-end pay increases are off the table.

Funny story: 3 weeks into COVID, firm asked all employees to volunteer for a 20% pay reduction in order to help the firm and prevent any COVID-related layoffs. The participation rate in this program was much higher than anticipated, and the Firm's management seemed glad. A week later, they announced they would be laying off 5 to 10% of advisory staff anyway.

Morale is down the gutter. Most of my friends in Big 4 advisory are currently seeking to exit.

 

There are some articles online discussing it and they quote a 10% workforce reduction. In reality, I have heard from friends that there were ~165 front office heads so it was a huge layoff. Think it happened last Wednesday. Who knows if you start seeing other large layoffs in the financial services industry come January 2021.

 

European bank in Europe. Higher ups basically said that there will be little to no bonus at all for this year, and that we should look forward to, and renew the pipeline for, 2021/22.

Gonna be some personnel cuts across the whole bank, but IBD sounds like it’s gonna be spared, and that we might poach some disgruntled talent from competitors.

In summary; job is feeling pretty safe, but not expecting any bonus.

 

What do you think the landscape will look for those in s&t?

 
Most Helpful

I realize it sucks working the same if not more hours and having a bonus get eliminated or reduced. Really though its just the nature of the beast. If you're going to be in finance for the long haul, you'll realize there are going to be good and bad years. Nothing is a given, most certainly bonuses. Easier said than done of course, but should all be thankful that the fed saved the market and thus finance jobs/bonuses. Could be a lot worse at the moment. Does this change anything in regards to being bummed out, no it blows no matter what, just providing some perspective as someone that has been through a couple cycles now.

Side note - in regards to why a PE bonus would be down despite AUM flat - its a function of both 1) they can pay lower because market has now legged down - bonuses are much more market driven than a reward for hard work/distribution of the honey pot, and 2) saving more for a rainy day just in case the fund needs the cash at some point.

  • edit- I fully expect my bonus to be down this year - any where from 10-50%. Ideally its not but I'm managing my expectations.
 
Senior VP :
Side note - in regards to why a PE bonus would be down despite AUM flat - its a function of both 1) they can pay lower because market has now legged down - bonuses are much more market driven than a reward for hard work/distribution of the honey pot, and 2) saving more for a rainy day just in case the fund needs the cash at some point.
Private Equity funds charge fees when they close transactions and a portion of the fees typically get allocated to the management company, which is the entity that pays out bonuses. In addition, portfolio company monitoring fees can contribute to the management company fee income. These supplemental fees are affected when the PE firm is not actively doing deals. Lenders typically "turn off" the monitoring fees when a portfolio company is in covenant default, decreasing the cash stream for the management company. Depending on the PE firm's structure, it may be heavily reliant on these two fee streams in order to pay full bonuses each year, which is why you can see bonuses cut during a downturn.

While yes it is possible that the PE firm is saving money for a rainy day, this is unlikely. The management company needs to pay tax on its income, so often times any excess profit is just dividend out to the partnership at the end of each year (many PE firms will have a profit share plan that accomplishes this). Note that the "fund" and the "management company" are two separate entities and you cannot just pass cash around between them.

CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
 

Yes, great points. Ultimately large funds with more than enough revenues/profits to go around purely based on mgmt fees might choose to pay lower bonuses to more jr people simply bc the market bears it. However, these are two great call outs on revenue streams that disappear even on flat aum. Its kinda a joke these these fees are even allowed by LPs as its the entire point of a mgmt fee but that's an entire separate matter.

 

Down 10-15% compared to last year meaning the bonus you yourself got last year or what someone else would've gotten last year?

I.e. is an AN2 earning 10-15% less than AN2 last year, or earning 10-15% less than AN1 last year?

 

All in normalized environments (no COVID) for top bucket. Might be higher at an EB.

AN1: $40 - $70

AN2: $55 - $90

 

I expected my bonus to be keeping my job, but I'm fortunate my shop is having a record year and my portfolio is on pace for an identical outcome as last year which was also a record.

Still 5 months left, I completely understand I may lose it all. And am just happy to be going along. I don't stress, I expect nothing. If I get nothing, I'll hit my expectations. If I get something, then great. I'm just going to try to do my part to keep everyone's head up.

 

BB AN 1 here (GS / MS).

Bonuses pretty much unchanged, management made a diligent effort to support analyst bonuses given were still working a ton. Obviously pleasantly surprised and we appreciated it.

Top may have dropped 7.5k but the mid to mid-top buckets same as last year give or take 2.5k

 

Yeah we were in the 125-150 range this year. Have to be pretty bad to be below 130 though. Most people hit that at least

 

Bump. How do people’s numbers look like - haven’t gotten mine yet?

 

The street in general keeps up in terms of what other comparable firms are paying analysts and potentially even associates so you can expect a level of uniformity across firm junior bonuses. Glad to see no one was particularly hard hit

 

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