While Wall Street’s bonus pools will be huge this year, firms wary of having talent poached are again locking in bankers by guaranteeing their bonuses for several years.
The pay increases for top producers and rising stars will still come at the expense of others, including some managing directors at bulge-bracket firms who this year will pocket a relatively scrawny $800,000.
“The problem is that you want to keep your top producers in their seats, but you can only take care of so many people,” said one senior executive at a bulge-bracket firm.
To do that, the multiyear guarantee – used to lock in a fixed amount of pay over a specified number of years – is creeping back into play to frustrate rival suitors bidding for top people.
However, recruiters angrily recount examples of nearly a dozen raiding efforts that have been foiled by multimillion dollar, multiyear counteroffers from besieged employers – including J.P. Morgan Chase and UBS – that not only matched but topped their bids.
Banking execs are also worried about losing talented junior-level employees, especially associates who might defect to rival firms or quit the Street altogether for jobs that offer a better lifestyle.
That’s why “star” associates, those bankers just out of business school, in some cases will be paid even more than vice presidents.
“Firms are aggressively fighting to keep their best and brightest. It’s easier to throw money and promises at top talent to convince them to stay than to go out and replace them, especially when you factor in recruiting premiums, time and head-hunting fees,” said Jeffrey Bell, a recruiter at the Whitney Group.