Investment Banking Compensation – Vice Presidents

Workers at many of the largest financial institutions may earn as much money this year as they did before the financial crisis, due to the strong rebound for bank profits, according to the New York Times.

Barring a last-quarter drop in the markets, workers who have held onto their jobs at investment banks may see their pay and bonuses recover from last year.

The article quotes Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm, as saying that he hasn’t seen big changes in the way people are talking about compensation. “Wall Street is being realistic. You have to retain your human capital.” Another analyst, Brad Hintz, at Sanford C. Bernstein, commented “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”

Banks are not spending more overall on compensation because, frankly, their workforces have shrunk. But the average pay for those who remain appears to be rebounding. At JPMorgan Chase, for example, workers in the bank’s trading and investment banking unit are on track to earn an average of $509,524 over the year. That figure was $345,147 in 2006.

With respect to compensation for Vice Presidents in investment banking, it can vary from a base salary of just $110,000 to $125,000, as seen in several online postings. Interestingly, in one survey, base salary for Vice Presidents averaged around that $110,000 figure, regardless of whether you had 1-5 years or 20 years of experience on the job. Perhaps this reflects a reliance on bonuses to form the bulk of a Vice President’s compensation.

As you would expect, a typical bonus structure is a multiple of that salary figure, ranging from two to three times base salary. Total compensation for Vice Presidents, based on a review of several online sources, ranges from a low end of $360,000 to upwards of over $700,000. 

As markets and bank performance continue to recover, we expect these compensation levels to hold steady, or even increase in the future.

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