Post-MBA Associates: Bonus Clawback/Cash Questions

Hi all,

I am a current MBA student on the west coast, and I will be interning at a boutique bank this summer in San Francisco. I was hoping to receive some help from everyone, and I thank you all in advance for your help.

I hope this does not anger people, but due to family reasons, I do not see myself working as a Post-MBA banker for more than 1 or 2 years...my parents are aging, my kids are growing, and this is an easy way for me to pay off my degree.

1) The signing bonus received at the end of the summer, is there a minimum clawback / work period for that? I should hit the full-time desk in June of 2021.
2) The year-end stub bonus, and the year-end A1 bonus (after first full year), are there clawbacks on those?
3) Do boutique banks usually do full cash bonuses, or vested stock?

Thank you everyone, I really appreciate it. These factors play into whether or not I want to target tech recruiting in the longer term, and just start off there.

I hope you are all safe.
-WestCoastBear

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Comments (11)

May 11, 2020 - 10:08am

So I can only add my 2 cents from what I've seen. for undergrad, we received signing bonuses in the range of 10-20K I forget the actual amount - with the condition we had to stay for a year. many many people left for PE within the year and their bonuses did not get clawed back.

for post-MBA it may be different, but if you leave for a non-competitor (like tech), I would think that they're not gonna claw back your signing bonus. especially a BB. They've got bigger shit to deal with. someone chime in if I'm way off base though

on FT bonuses, there is no clawback on the cash amount. as soon as it hits your bank account it's yours and you can bounce. most Boutiques are private companies and thus usually pay all cash bonuses. I wouldn't worry about getting deferred cash bonus comp as a junior associate, you'll be fine to leave whenever you want without leaving money on the table.

May 11, 2020 - 10:10am

Signing bonus claw back within 12 months but looks like you'll last longer. Stub is too small for clawback. Full year bonuses tend to have a stock portion (larger at bulge brackets like 20% of bonus, smaller to 0 at others) spread out over a 3-4 year vest period. If you leave, you lose unvested portion. Some employers (at least competitor banks) are willing to make you whole on that. Can always ask your new employer. Jefferies seems to have something tougher but you aren't going there

Array
  • 2
May 11, 2020 - 10:57am

I've also seen signing bonus clawbacks in the range of 18-24 months. Your presumptive full-time offer letter will detail clawback provisions.

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Most Helpful
  • Associate 2 in IB - Cov
May 11, 2020 - 11:32am

Every bank is a little different. From a top MM.

Sign on clawback is 12 months. No monthly / quarterly stepdowns. If you leave 1 month in, or 11 months in, you still owe full gross amount (I'm sure you can work something out though).

YE bonus clawback only occurs when you leave for a competitor. If you leave for PE / Corp Dev / etc, you owe nothing. Let's assume you leave after 2.5 years on a 3 year vesting schedule (stub, AS1 and AS2 bonus):

Stub: $50k -> after 2 years you owe $16k
AS1: $150k -> after 1 year you owe $100k
AS2: $200k -> after 0 years you owe $200k

So after 2.5 years, if you go to a competitor, you owe $316k. Your net bonus pay is roughly $272k (32% all-in tax rate).

I think my bank is one of the tougher on clawbacks, but it sure as hell is going to keep me from jumping to another bank

May 11, 2020 - 9:20pm

Lol this is like only done at Jefferies, AFAIK (snakes)

Array
May 11, 2020 - 12:29pm

At MS, when I was there, clawback on sign on bonus was 12 months. No clawback on stub or FT bonuses as far as I know (most people wait until the cash is literally deposited into their bank account before tendering their resignation, just to be extra safe). At the time, as an A1, a pretty meaningful portion of my A1 bonus was in stock with a two year vesting schedule. But it was the first time they had done that and management realized it was too punitive on associates, so the class below me got all cash in the following year. I think these things change every so often depending on economic environment, so getting stock as an A1 is not out of the question (since that's what happened to me!).

May 11, 2020 - 7:45pm

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