Investment banks often have two or three ranks after the associate level. To get to these levels, the funnel narrows significantly and both the competition and the compensation increase exponentially.
Many MBAs start at the associate level, where they’ll still be working on financial analyses, quarterbacking transactions and developing new business. After working as an associate for 3-4 years, a rising start may be promoted to Vice President. Continuing on an upward career trajectory might lead to a Senior VP or Director’s position in another 2-4 years, and finally to Managing Director or Senior Managing Director.
Vice Presidents manage a team of professionals doing financial modeling and pitchbook preparations, and work on building key client relationships. If successful, a vice president could be promoted to managing director, and spend more time on maintaining and enhancing client relationships.
It’s common for rising stars to specialize in a particular industry such as transportation, mining, health care, real estate or energy. With more and more experience in that industry, an investment banker is able to quickly apply industry facts and figures, trends, forecasts and other useful data.
Vice presidents at investment banks receive an average salary of approximately $110,000. Depending on experience, median bonuses are about $135,000. The compensation package for managing directors, however, can reach anywhere between $400,000 and tens of millions per year.
At the top, there is really no limit to income. Jamie Dimon, Executive Chairman and CEO of JPMorgan Chase & Co, has received a total cash compensation package of over $15 million. Goldman Sachs paid its Chairman and CEO Lloyd Blankfein almost $54 million for one year of work.
However, as of 2009, banking salaries and especially big bonuses are under attack, due to the financial crisis and the TARP program. There is increasing public outrage that public bailout money could be subsidizing fat bonuses to investment bankers. Nevertheless, many experts still believe that performance-based bonuses are an essential part of structuring compensation for investment banking jobs.
Next time we’ll look at some of the specific skill sets and day-to-day activities of Vice Presidents and Directors at investment banks.