BonusBumper Update: The Star System

There aren't any updates to the BonusBumer chart today (you can check the latest chart out here). We encourage you to send any new info, especially the missing pieces of the puzzle (there are several banks absent from the list), to "tips at dealbreaker dot com." Instead of a bonus update, a bonus digression:

It's actually remarkable that the banks risk reputational shortfall among the proletariat in the first place by not matching each other in terms of top bonus payouts. Where an individual analyst is hardly a blip on the value-add spectrum, in aggregate analysts keep the gears of a bank (or deal) moving, and without them banks would be left with MDs who actually had to print documents, model, make charts and perform logistical feats people making seven figures are utterly incapable of doing. For some reason that part of the brain shuts off when you make MD, even for the true sadists (cyborgs?) that are A-MD (yes, straight Analyst to MD promotes - we had 2 of them in our group, and they were just as unsympathetic to killing you on a project as everyone else). An analyst-free bank would quickly devolve into a Lord of the Flies-esque situation (documents printed with feces, human blood?), and it would only be a matter of time before the fat guy with glasses who runs equities would be thrown off a cliff.

As often noted, and what you find out quickly on bonus day if you have lips that aren't permanently suctioned to your higher-ups, the bonus figure banks provide is for the very top of the top tier. The top keeps growing, just so banks can say they increased bonuses, but so does the deviation between the top bonus and the rest of the pack. Banks already have elaborate justification systems in place to swing this. JPMorgan, and I don't know if they still call it this, implemented this thing called "The Star System" in order to justify paying the kid with the best attitude (loosest posterior, biggest toolbox, person who couldn't find a job at the end of two years) the "top" bonus and then paying everyone else (people who actually told the staffer they got another job to be respectful rather than just quitting after getting the second year bonus number) a pretty fair deviation less.

Aside from the ability to smile during a prostate exam (or colonoscopy), there isn't that much of a difference between analysts. The Star System, as I mentioned in my farewell email, was apt in that it usually did a good job of rewarding giant balls of hot flaming gas.

The question is, since banks already inflate the top why don't they just match each other and not risk a "cheap bank" moniker (at least in terms of something pre-pooled and relatively controllable like analyst bonuses)? How imperfect is the information banks are given about other banks that they can't pull this off? The real difference between a cheap bank and a happy, generous bank, is the deviation between the top bonus and the rest of the pack, and how closely the rest of the pack is clustered, which conveniently enough, can never be ascertained from the bonus figures banks provide.