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.

Comments (90)

 
  • Associate 1 in PE - LBOs
Jul 21, 2020 - 11:51pm

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.

 
Jul 22, 2020 - 12:50am

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.

 
Jul 27, 2020 - 11:43am

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.

 
Jul 22, 2020 - 4:42am

Not IB, Distressed PE/PD here, bonuses are off the table completely.

But vertical movement is definitely possible since lots of mid-level people are leaving. So somewhat okay if the junior guys are promoted since our bonuses probably equal the pay raise to AVP/VP level

 
Jul 22, 2020 - 10:22am

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.

 
  • Analyst 1 in IB - Gen
Jul 22, 2020 - 10:35am

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.

 
Jul 25, 2020 - 11:33am

What a stupid question. If you think S&T is dying, I ask you to meet with senior people in the industry.

Array
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  • Associate 1 in IB - Gen
Jul 22, 2020 - 1:16pm

Not sure about when the timing is for everyone but one of those shops only announces after their earnings release. Only EVR (today) has released earnings so I expect no numbers until 2 weeks from now

 
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  • Senior VP in HF - Other
Jul 22, 2020 - 11:12am

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.
 
Jul 27, 2020 - 3:44am

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

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  • Senior VP in HF - Other
Jul 27, 2020 - 11:02am

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.

 
  • Analyst 3+ in IB - Gen
Jul 22, 2020 - 2:46pm

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?

 
Jul 22, 2020 - 7:15pm

a hit of $15k is peanuts, I think a lot of folks will wind up lucky to keep their jobs and if they do might see 25%-50% drops from last year.

--$$--
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Jul 22, 2020 - 10:25pm

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.

 
Jul 23, 2020 - 12:20am

So signing bonuses for incoming FT are off the table I'd assume?

Array
 
  • Analyst 1 in IB - Gen
Jul 23, 2020 - 11:22am

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

 
Jul 23, 2020 - 5:45pm

I received my bonus already this year. Next year maybe a toss up.

Greed is Good!
 
  • Associate 2 in IB-M&A
Jul 25, 2020 - 12:41pm

If your bank does stub bonuses in December you'll probably receive something, but down from previous years. Depends on firm/group

 
Jul 25, 2020 - 11:34am

Not bad, no issues from our fund. Only back office is being cut ofcourse. Some desks had huge increases in bonus. Really varies on the desk your on.

Array
 
  • Associate 1 in PE - LBOs
Jul 26, 2020 - 6:20pm

Left a top group at mid-level BB a few weeks ago. Shockingly, bonuses were a lot better than expected: top bucket was $70k for AN2. The MD who gave me the number indicated that $70k was ~10-15% under last year's top bucket bonuses, so last year was $75-85k if I had to guess.

 
  • Associate 3 in IB - Gen
Jul 27, 2020 - 12:10pm

I know we paid our analysts 10-20k less across the board at a lower BB

 
Aug 1, 2020 - 7:31am

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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