From the category archives:

Compensation

If you haven’t been to a web site called Payscale.com, take a minute and visit it. Sadly, it’s not terribly useful for estimating entry-level and junior investment banking jobs, but it’s still a hoot. And there’s also plenty of other good, solid information for you.

Job hunting is job hunting, whether you’re a fixed income analyst or a junior trader or a database administrator or a sous chef. It’s all about finding the right opportunity, then getting to “yes” with a prospective employer. Your next boss is just likely to pay better than the sous chef’s. And no matter how much you’re likely to be paid in investment banking, there are certain people who are likely to make you look like a retail assistant manager in a JCPenney suit. They’re called “celebrities,” and they have to negotiate over their gigs, too.

The waggish bloggers dispense career advice on Payscale.com with the hook of “[n] Career Lessons from [Famous Person]”. We first stumbled across this sage, if oddly presented, advice in a post titled “5 Career Lessons from Iggy Pop“.  “If Iggy Pop seems like a strange person to turn to for guidance, consider this: he’s been making music for over 50 years now, has survived everything from drug addiction to disco, and, with his band the Stooges, recently entered the Rock and Roll Hall of Fame,” blogger Jen Hubley Luckwalt begins. “Clearly, he knows a thing or two about enduring, even if he can’t advise you on corporate dress codes.”

She then outlines negotiating lessons gleaned from Iggy’s concert rider from his 2006 tour with The Stooges. For example, the erstwhile James N. Osterberg requests red wine be available backstage, but leaves such details as labels and vintage at the suggestion rather than demand level. From this, Luckwalt infers, “Be considerate.” Other elements of the 18-page document provide such instruction as “Use humor,” “Be well-informed,” “Understand the importance of environment,” and “Be yourself.”

But Iggy Pop isn’t the only celebrity that inspires Payscale.com’s bloggers. In response to Miley Cyrus’s infamous twerking performance at the MTV Awards (no link — you’ve already seen it), Luckwalt draws five more lessons from the young woman who will never again be singing under the name “Montana” (although she might end up dancing under the name “Dakota”). Credit the blogger for drawing five examples of things not to do.

Speaking of people who don’t know when to get off the stage during awards shows, there are “4 Ways We Should All Be More Like Kanye West.” From the hip hop star’s grousing about never having won Album of the Year, we are offered this takeaway: “Realize you have more to learn and room to grow.”  Mark Zuckerberg. The Kardashians. Tina Fey. “The Ladies of Madmen.” And every geek-boy’s favorite: She-Hulk (“Don’t accept less than you deserve”). All these and more are fodder for this offbeat but worthwhile blog.

We humbly offer this lesson for investment banking job hunters, inspired by the scribes at Payscale.com: “Find your niche, stand apart from the pack, and don’t try to be like everybody else.”

{ Comments on this entry are closed }

Lackluster performance has finally caught up to investment banking employees in Asia. According to a recent Bloomberg report, compensation for managing directors at major firms has fallen sharply this year in China in particular, down as much as 60 percent. This marks a low water mark for compensation in the region, not seen at any point in the last decade. Much of the decline in compensation has come from smaller bonus pools, as institutions struggle to generate revenue in a difficult economic environment.

North American Investment Bankers Regain the Lead in Compensation

For several years of the last decade, investment banking professionals working on Chinese deals held a compensation advantage. However since 2010, the tide has turned to favor those working in North America. In the past year, those working on Chinese deals earned between $900,000 and $1.3 million US dollars in total compensation, including salary, cash bonuses and stock options. This compared to an average range of $1.2 to $2.0 million for North American investment banking employees.

Analysts suggest that this shift in compensation reflects reality, rather than a fall below reasonable levels. According to Richard Hoon, CEO of a leading Singapore-based executive search firm, over the last decade pay had “went beyond the market, and now they’re back to market reality.”

In the past, those with skills and experience in Asian business practices, especially language capability, were paid a “China premium.” As the number of initial public offerings and merger deals has declined since the financial crisis, there is no longer a shortage of available investment banking professionals willing to use their skills in the region. Accordingly, this China premium has disappeared.

What are the Implications for Investment Banking Job Seekers?

The Asian investment banking market has held out as one of the limited number of bright spots for potential job seekers for the past several years. Continued robust economic growth in many emerging economies in the region created deal flow that simply did not exist in the traditional markets of North America or Europe. Now, as transactions slow in the Far East and regulators increase pressure on the industry at home, investment banks are scaling back their teams.

While the data from China is certainly not encouraging to those seeking out international opportunities in the industry, this data only represents one country in a region with vastly diverse economies. Opportunities continue to be strong in Singapore and Malaysia , and there is certainly the possibility that China could quickly return to growth. Compensation may be slightly lower than in the past, and opportunities may be fewer and far between, but the market does offer some intriguing possibilities for those that want to seek out a unique experience.

Of course, some skills will be critical those seeking opportunities in the area. Knowledge of local languages, especially Mandarin Chinese, is a major advantage, thought not necessary for all jobs. Experience in the region, whether within the financial industry or general business, is also a key attribute. With the right skills and experience, along with an interest in experiencing an entirely different business culture, those interested in an investment banking career still have opportunities in Asia, even if such positions have seen reduced compensation.

{ Comments on this entry are closed }

At least one major investment bank is weighing the option of freezing bonuses for their junior investment banking jobs, a move that could catch on if other major banks follow their lead.

Credit Suisse is reportedly considering suspending the automatic bonuses doled out each year to analysts, associates and some vice presidents, according to a story in Businessweek. These staff will still get their regular annual salaries, but bonuses may be lowered to keep total pay flat from the year before.

Industry insiders are watching to see if other big banks such as Goldman Sachs or JPMorgan Chase follow suit. If they do, it could mark a turning point on the Street. But if not, it could open up Credit Suisse to large-scale defections by junior bankers who are able to get higher pay packages elsewhere.

Junior-level bankers typically comprise about three quarters of a firm’s workforce. They often start with base salaries in the $200,000 range, and can expect increases of 15 to 20 percent each year. An investment banker often spends three to four years as an analyst or associate, then three more years as a vice president before being named as a director. Top-producing vice presidents in their third year can earn in the neighborhood of $600,000 to $700,000 in total compensation, according to the article.

A plunge in trading revenue and European debt worries have put a crimp in profits for the big banks, thus leading to more strategies for cutting costs. However, limiting pay among junior bankers could be a risky move since juniors tend to talk more with peers and former classmates and compare notes. The news of lower entry-level pay at one firm can put it at a disadvantage recruiting new employees.

Many of the big U.S. banks will inform their employees about salaries and total compensation by the end of January. New compensation schemes would go into effect at the beginning of February. With earnings estimates slashed by a downturn in trading revenues, the banks are eyeing each other’s compensation plans carefully this month before determining their next step.

What’s your opinion? Do you think the inevitable downward pressure on total compensation, especially for more junior employees, is going to put a damper on young people pursuing investment banking jobs? Add your comments below.

{ Comments on this entry are closed }

Investment Banking Trading Jobs Face Pay Restrictions

October 3, 2011

Investment banks would have to change the way that some of their traders are paid, if one of the proposed restrictions in the evolving Volcker rule comes to fruition, reports Businessweek. The new rule is part of the Dodd-Frank Act, which is being crafted by regulators from five Washington agencies and could be released in […]

Read the full article →

Investment Banking Job Pay Heads Downward

May 2, 2011

It has been two years since the financial crisis put a major crimp in hiring and salaries. But it appears the downward pressure on investment banking job compensation is here to stay, at least for a while, reports the Wall Street Journal. According to the “Wall Street paymaster” interviewed for the article, an executive inside […]

Read the full article →

Investment Banking Compensation Still in the Clouds

March 21, 2011

More than two years after the financial crisis, compensation at jobs for major investment banks is still robust, and growing. Total Wall Street pay was up 6 per cent last year, with an average cash bonus of nearly $130,000, according to the New York state comptroller’s office, as reported in the Financial Times. The Times […]

Read the full article →

Look East for Investment Banking Job Bonuses

February 21, 2011

At a time when the big banks in New York, London and Europe face closer scrutiny and political backlash against big bonuses for those in investment banking jobs, the action seems to be shifting eastward. Total investment banking revenues from the Asia-Pacific region (excluding Japan) jumped 56% in 2010 to $12.2 billion, rising to nearly a […]

Read the full article →
Real Time Web Analytics