From the front lines:
GS sales and trading [analyst] class of ’08 got 20k but prorated since they started in summer so only 10k. After taxes, 5. Happy Hannukah.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
That’s 5K more than a lot of people are getting this year!
poor guys…I feel so sorry for them. I am willing to share the prorated turkey I got from my boss. Leg anyone?
poor guys…I feel so sorry for them. I am willing to share the prorated turkey I got from my boss. Leg anyone?
is that BA’s or MBA’s?
Is that associates or analysts?
these are associates or analysts?
Fuckin disgrace. Might as well go work for the Post Office!
Associates
Associates
Bad news either way. Can’t say anyone should be surprised. Bank tellers don’t get big bonuses. http://deltahedged.com/
@5: I thought MBAs started in the summer, BAs in Sept. So this would be MBAs
That better be analysts… and shitty even then.
An S&T associate. down 30% from last yr. dont know what desk (believe futures)
What would this bonus typically be?
06 stubs were around 45k
06 stubs were around 45k – not prorated
sorry, they are definitely not in a 50% overall tax bracket. maybe 6.5k. feel better now?
lol 10k. Even my first year as a developer I got a better bonus than that. Better base salary too.
that must be analysts- it’s the same as 1997 pay!
@14 down 30% is not bad, at all
$5K wouldn’t pay for a good night at “the Jimmy” in Houston.
~Jimmy Krack Corn
East Texas Gas trader
@8 “skills” not transferable to PO.
3nd Year Analyst here covering EMEA
bonus down 60%…I only got 80K..its disgusting….
look at the gifts I get…cheap chinese shit…will throw it into flush now
my girlfriend in LN got a good one…to my surprise..she know nothing…but talks nicely…
The IT folks who sit near our area (apparently from TCS India) are giggling at us. Not sure what they are making fun of us. Its hell here folks in JC office.
21, bubble days are over. we are going back to 1990s. Get that delorean ready!
What would this bonus typically be?
What would this bonus typically be?
VP level bonuses down 40%, confirmed by friend in Equity S&T. So figure 300-500k VP level bonuses
oh and bonuses at GS are heavy stock that vests over 5yrs instead of 3.
@19 bonuses are taxed at a higher rate than normal income, 50% doesn’t sound outrageous.
oh come one, ive heard of worse. @19, I believe bonuses are taxed in a different (higher) bracket.
@33, @29: does that mean the $400K number is partly/mostly in stock that vests over 5 years?
Adjust your witholdings (i.e. married with 10 dependents) to minimize the affect of the tax on bonuses. In the end it doesn’t matter your federal taxes are on total comp.
The last bonus I got (from a different firm) was reduced by 40% in taxes because it was a “lump sum”. Bastards.
Why do you believe that, carrytrade?
Everyone that says bonuses are taxed at a different rate has not filed a tax return while working in the industry (more likely: not in the industry).
Bonuses are *WITHHELD* at a different rate. At the end of the year, they are taxed at the same rate. As 35 said, you can adjust this impact by playing with your withholdings.
bonuses are not taxed in a higher bracket, dont be stupid.
Who are we still waiting on – DB, CS, any other big banks? Any news yet? Also, what is the word on the MD bonuses, with all due respect – who cares about the first year guys? We want to hear the real pain! I want to know what the $10m guy got.
Are you people that stupid or do you just trust your acountant enough that you have no clue how your tax liability is computed?
>> 300-500k VP level bonuses
are you fu(king kidding me ? this sounds too high in current environment.
Pls clarify
Hey boys – hard to pay back that MBA loan on these types of numbers….nice move on going back to school
5,000 after taxes…what in God’s name…
Who are we still waiting on – DB, CS, any other big banks? Any news yet? Also, what is the word on the MD bonuses, with all due respect – who cares about the first year guys? We want to hear the real pain! I want to know what the $10m guy got.
ok my mistake – withheld at a higher rate. Still a free loan to the government. So 6.5k it is, but you won’t get it all back until mid 2009. Thank you automatic savings program. http://deltahedged.com/
I thought analysts were paid in June – stubs are only for associates.
Is GS different in that respect?
Bitterly crushed.
Sincerely,
IRS
GS IB associates got $10K this summer (on top of signing bonus) plus a $5K bump in salary. Factor that into the year’s comp.
“300-500k bonuses”
Thats right. Most VPs at GS make 150-175k in base salary. Last year the top guys were getting 700-900k bonuses.
a couple of you are having a difficult time understanding that these are ANALYST numbers. Goldman moved their analysts to this stub cycle so they are normalized like all the other levels.
That being said, 10k prorated looks right for a 1st year analyst. If you look at bonus levels for 1st year analysts in ’02/’03, they’re around 20-30k.
@47- yes, they announced this a few months ago, so that they’d be on schedule with the rest of the firm.
what was the typical first year bonus of years past?
65k bonus for top tier 1st year analysts this past year (so class of ’07).
150K Base
750K bonus ?
Is this correct ?
where I used to work (MS), base would be ~200K and bonus would be ~400K. A double is normally the norm ?
Look at it from the bright side, this is the last year you’ll get a bonus like this.
what are first year associate numbers?
5,000 after taxes…what in God’s name…
Goldman or wherever, must be nice to get any bonus at all (especially if your desk/group wasn’t exactly “profitable), methinks a little humility would go a long way…
CS doesn’t report numbers until mid january
Any color on stub or first full year associates much appreciated.
@56 Most deluded comment of the entire thread. Things ain’t going back to “normal” any time soon, son.
56 might have been being sarcastic. 2009 bonus will be even worse than 2008. There will be further 20% staff cut in 2009 as well. there is no going back to 2007 level
holy shi*.. heard my MD got 2 mm.
Ofcourse he is class..but isnt 2 mm a bit too much (in todays world) ?
@63, maybe that was 56′s point.
whats associates and VP numbers on trading desk?
holy shi* , MD seems to have got 2 mm.
Ofcourse he is a class act, but isnt 2mm a bit too much in todays world ?
– Treasury Guy
#65 – I am your MD. Pipe down and get back to changing the bindings on those pitch books from white to black
holy shi* , MD seems to have got 2 mm.
Ofcourse he is a class act, but isnt 2mm a bit too much in todays world ?
– Treasury Guy
@65 – sounds extremely high – what desk?
@65 – sounds extremely high – what desk?
10 k i got more back in consulting. and pe bonusses are flat from last year at least at my sweet firm.
bye now. PEB
PEB, good luck on your carry
How is it possible there are 75 posts and no credible information at all on this thread?
How about stub year and first (non-stub) year associates in IBD?
Read that BMO was 35k and 120k, respectively…would appear to be down 40%.
Any hedge fund bonus numbers?
MICHELE CABRERA’S TITS LOOK FANTASTIC TODAY!
@78 Hedge Fund bonuses have been redeemed. Sorry.
does anyone really know anything? how about one person with some knowledge lay out bonus rages by title… or not.
does anyone really know anything? how about one person with some knowledge lay out bonus ranges by title… or not.
nothing useful
@81
better yet, let’s lay out bonus ranges by social security numbers!..
@81-83 Please refrain from reading/posting on DB.
Hearing $135k for full first year associates in coverage.
@Analyst – Nailed it. How someone who got an $80k bonus can say it’s “disgusting” regardless of what it was last year when people are losing their jobs daily is beyond me. I would gladly take an $80k bonus if you want to trade.
@86, is that mid-point, top of class, etc – any idea?
I-Bankers should participate in the following survey this year when it becomes available:
http://www.wallstreetcomps.com/survey.asp
Any numbers for Madoff prop traders?
I-Bankers should participate in the following survey when it becomes available after January 1:
http://www.wallstreetcomps.com/survey.asp
@88 Sorry, no clue. I gotta think top though. Anyone have anything more?
Any numbers for Madoff prop traders?
@89,91,93. Fuck off
@92, my guess is that’s not top – I heard MS was a range of $100-$150 and I can’t believe that MS is paying a premium to GS…
Anyone???
@92, my guess is that’s not top – I heard MS was $100-$150 and I can’t believe that MS is paying a premium to GS…
Anyone???
nope! don’t post anything! let these suckers wonder!!!
Still waiting on numbers for Barclays Capital analysts. And btw, more analysts read DealBreaker than MDs, so yeah, some of us care.
I’m looking to participate in a IB comp survey. Does anyone have a link to a site that would have such a thing?
Still waiting on numbers for Barclays Capital analysts. And btw, more analysts read DealBreaker than MDs, so yeah, some of us care.
@94 – I heard 15 to 20 ( as in years )
Anybody know assistant greenskeeper numbers ?
Too dealbreaker’y … didn’t read.
96, 100-150k for 1st year associates for 2008? that doesnt seem like much of drop at all from 2007. you sure those numbers are right?
@99 – You’re going to be waiting awhile if you’re looking for Barclays Capital. They won’t announce until mid-February…
Isn’t “bonus” for Wall Street an oxymoron this year?
@104,
1st year associates received 250k last year (350 all-in)
Sounds like a 25% to 50% drop…?
@104,
1st year associates received 250k last year (350 all-in)
@99 – You’re going to be waiting awhile if you’re looking for Barclays Capital. They won’t announce until mid-February…
@61 – well done.
@109,
350 all-in for fucking it all up. That’s great, Generation Entitlement.
@87 – Do The Job. Live in Manhattan. Try to do both on an $80k bonus. It’s not like people work 9 to 5, Mon-Fri with an hour for lunch and 2 union-mandated 20-min smoke breaks and 3 weeks paid vacation per year. It’s high tension, high sacrifice, high risk, high reward, no matter how much you want to believe it’s a do-nothing job where people get $$ showered on them for showing up at cocktail parties. Plus, you generally have to have excelled academically for some time, since high school and even before in many cases, in order to even get to play.
Go ahead. Point out the inevitable exception you know. Doesn’t make the generality less true. Just because you didn’t bust your ass since before high school to put yourself into a position to make that kind of money doesn’t make it less hard for people who did.
“Peasants with Pitchforks”
@112
Generation Excellence
Soft Dollar Operations @ MS- 2nd year. Got $150k, down 30%.
@114,
“Excellence” in fucking it royally up.
@113, eat a dick. Remind me why you deserve a big bonus when your company lost $2bn this quarter?
@113, do they teach government bailouts at these academically excelling middle school, high school and higher educations? i feel left out that i could not attend one of these schools that could train me to fuck up so bad that i had to have the United States Government come and bail me out. As you said, high risk high reward, could that not be viewed as high risk, high fuck up, low reward?
-just a common peasant
@117 For being more intelligent than you.
@117
“Because we make capital more efficient!” … It was a good racket while it lasted.
@117, banks don’t pay their employees bonuses just because they feel like it. These are profit making organisations and pay bonuses to employees who they feel will benefit the firm and be profitable in the future.
#113
You landed the job of your dreams after busting your hump for endless hours each and every week for years and years. Guess what, the world has given you one big shit sandwich. Happens all the time to lots of job sectors. Banking was different for quite a long time. No more. If you don’t like it, look for another job in another line. I did.
wow the level of bitterness is amazingly high, even for DB…
memo to the non-financial people:
“Bonus” does not equal “special reward for doing particularly well.” Depending on how high you are the the food chain, it equals something more like “2/3 of your overall compensation, which varies highly based on how well the firm/your group/you do”
At an ibank, if you’re going to get paid 300k /yr, they don’t give you a 300k salary and say “if you’re really good we’ll give you a bonus”, they say “your base salary is 100k. in a good year, your bonus will be 300-400k. in a bad year it will be more like 100k. It will also be 50% company stock that will be locked up for 3 yrs min. Now go work 75 hour weeks.”
By any reasonable standard, a normal/good year bonus is a lot of money, but a “you get $0 bonus” translates into “you get paid less per hour than the average plumber”
No one’s asking you to weep for these folks, but the hatred could be toned down a bit…
Also, don’t forget Analysts and Associates have almost nothing to do with the decisions that resulted in these huge losses – they are getting paid for long hours, hard work, intelligence and the significant investment required to get a foot in the door.
@123: You’re correct – bonus is what keeps you going late at night, and $0 sucks – they deserve more than that. But the sense of entitlement for the huge bonuses is just as bad – I don’t care how much you work. There’s a happy medium. I’ve been there and chose to leave after realizing the system is broken. For every brilliant Ivy league grad who has made a lot of sacrifices to get there, there’s also a lot of middling losers who are only there because they have no life and don’t know how to stand up for themselves.
@123: You’re correct – bonus is what keeps you going late at night, and $0 sucks – they deserve more than that. But the sense of entitlement for the huge bonuses is just as bad – I don’t care how much you work. There’s a happy medium. I’ve been there and chose to leave after realizing the system is broken. For every brilliant Ivy league grad who has made a lot of sacrifices to get there, there’s also a lot of middling losers who are only there because they have no life and don’t know how to stand up for themselves.
@125
It was a good racket while it lasted. Time to move on to the next gig.
@125 (123 here)
you’re correct, I was just trying to clear the air for the non-financial people who don’t know how things work(ed). Bonus “entitlement” is directly proportional to the pile of money you can point to at the end of the year and say “I made that.” No more, no less. the errors go both ways.
@123, cherish the good years, the new cars, houses, whatever it was you picked up the past year ends, this year you shit the bed and wont get it, seems fair right? Its a risk, get paid big in the big years, get paid bad in the bad years, get shit in the shit years. no one feels bad for you, especiall not the plumber who probably lost his job bc the government did not bail him out.
129 – there are plenty of people in finance losing their jobs and more. Who did the bailout actually save? No one at LEH, not a lot of people at Citi or MER, so tell me who? Although I agree with your point about enjoying the good years b/c it can never last, but who thought it would end so hard and so fast.
If you enjoyed reading that last line, you’re welcome.
Don’t you guys know? Plumbing is booming.
Must be all these new houses being constructed!
@130, you think the bailout money did not save jobs at banks, autos, insurance companies, etc? job cuts happened, but laying off 10% of your staff vs. bkrpt is not a bad deal. It is annoying to hear someone complain about getting a reduced bonus when there company takes 10b from the gov’t. You were paid when things were up, why you think you should also get paid when they are completely fucked? Hopefully you saved for a rainy day.
113, you said it yourself. “High Risk, High reward”. You’re currently enjoying the risk side of that trade-off.
Can someone please post ranges for associates and VPs?
@133,
It’s more like: “High bailout, High reward.” Get with the program.
@113 You “bust your ass” since “before” high school to become a f*cking banker? Wow, hilarious and so very pathetic at the same time. Sucks to be you.
-another humble peasant
Very ugly out there. At what point do you throw in the towel and decide that its not worth it? 80 hours a week for something thats not terribly fulfilling is a lot of “life cost”, and without a big salary, how do you justify?
http://freeagents.ning.com/profiles/blogs/free-agent-by-choice
I got a $95k bonus last year and a $105k bonus this year. I’m certainly not complaining, but it’s all relative to expecatations so yeah, I’m annoyed not have received $125k.
Hey, $5,000 is not going to pay for 1 night of drinks!
–AJ
http://www.youtube.com/watch?v=v0TGpe2KMUs
@134:
Who gives a fuck about associates and VPs? Oops, sorry, I forgot, this is DB.
@136 – maybe it seemed like a better bet than the high school dropout / dot com millionaire route?
Guys, I am confused. Please help me out. I work for a hedge fund (struggling this year) and all my friends at banks got laid off.
When we say “30-40% cut” are we talking about cut from what one made last year or from the previous class?
For example, let’s assume this:
2007 bonus only
1st yr assoc: 250k
2nd yr assoc: 350k
3rd yr assoc: 450k
Now, we have a post up there saying 1st yrs this year got 150k. So let’s assume this:
2008 bonus
1st yr assoc: 150k
2nd yr assoc: 250k
3rd yr assoc: 350k
If this is the case, then there is no pay cut in absolute terms. Only discount from what an equivalent seniority made last year. Am I interpreting data correctly? If this is the case then the dollar amount received is essentially flat from last year.
Please comment
@142 You have successfully confused the every poster
@123/128 Thank you for the pedantry but contrary to what you think, us “non-financial people” on DB are not hicks/union-workers/plumbers who need to be schooled on the finer points of your compensation structure. I know exactly it works and how much you contribute to society working 80 hr weeks.
-LeftWing.
P.S You seem like a decent person, so no vitriol intended towards you.
143, you must be a banker if you cannot understand simple logic like that.
Oh, and no offence to the h/u-w/p etc.
-144
144, go make some more copies. Leave thinking to us derivatives traders
Post 142 Translation: Does a “down 20%” comment mean :
1) a given 3nd year who was a 2nd year last year received 20% less than he did last year
2) 3rd years are receiving 20% less than what 3rd years did last year.
Relative to self + 1 year advancement OR relative to class.
sorry 144, meant for 143. -147
Down 20% is describing classes, not people. It’s like saying “2nd year associates are getting 20% less this year.” So if you were a 1st year in 2007, in 2008 you are getting 20% less than what a 2nd year got in 2007.
It is possible to be “down 20%” but still make more than you did last year. Depends on how much you and the class ahead of you made last year.
Any relevant bonus comparison is based on a YOY cohort variance. Basic math kiddos…
I’m a derivatives trader. I can’t read/type numbers properly.
-147
142 – wish you were correct with your interpretation but you are not. From someone who actually works at GS, in a profitable group, first full yr associates were down yoy vs own 07 numbers…so down an aggregious amount on a % basis from what the associates a class ahead of us got (which would have been much better). Sounds like MS analysts headline #s were a little higher but I assume that includes the weird cash vesting thing + stock. So on a cash basis we probably did the same or better at GS.
@153 “egregious”
Stick to words under 5 letters next time and very slowly work your way higher.
“aggregious”…
Something to do with farming perhaps?
153 – So does that mean you did not get $150K? More like $100K? Over or under six figures?
cant defend my spelling and wont try but glad we have some liberal arts majors on this thing
156- Seems like the 1st yr associate bonus well below $150k on avg…..
156- think your second guess is a lot closer to average than your first
Yes because only liberal arts majors know how to spell words. Well, maybe home-schoolers too.
The reasoning on why these people deserve bonuses is ridiculous. Selfish pricks 101.
associates who just finished their first full year havent done shit, 2008 was slow as balls, those who i speak about know its true…06 and 07 were fucking crazy, no time to breathe, 08 was a joke, so dont act as if you deserve tons of money, hours this year were ok and thats fact
disclaimer: third year assoc talking
@118
@136
@144
Please get off Dealbreaker – why are you “Main-Streeters” reading a thread for bankers? I and all the other bankers on this thread know why you’re here: you’d never make the cut for investment banking, and you know it, and you’re trying to make yourself feel better. We see your type all the time, spewing hate and self-righteous anger out of all your middle-class, corporate-job pores. Seriously, isn’t it embarassing to be so obvious and ignorant?
I’ll let you in on the secret: all the bankers on this thread, no matter what seniority, no matter how mad/pissed/offended we are by what our shitty bonuses are this year, know that at the end of the day we made the cut and our careers will continue to rock. Yes, it’ll hurt for a few years but even a “bad” bonus year = money that people like you can only dream of making. So go ahead, tell us how we suck, blah blah blah. Then get in your Camry and go home. Supper’s waitin’ for ya. Don’t miss the commuter train!
163 I’d be interested in hearing why your career is going to be rocking. Looking forward I see a few lean years with regard to revenue. Doesnt matter that you survived the cut. The golden days are over. There was an internet bubble then a housing bubble. Unless you think of a new scam, theres not gonna be much revenue to share.
@163
too douchey – didn’t read
Enough with the 80 hours weeks. You know its mostly face time as well as a badge of honor among your peers, esp in this market where nothing is happening. Its as simple as this: if your firm or dept doesnt make money, you dont deserve a bonus. Doesnt matter that a large % of your comp is bonus. Thats just how the game works. What you produced had no value if it didnt generate revenue.
Don’t forget the fact that when bankers got paid generously in the good days, they also paid substantial amount of taxes. In absolute amounts, the top 10% of wage earners paid 65% of all federal taxes. Taxes paid by a first year analyst in ’06 were likely higher than what most of the “Main-Streeters” made as all-in income. The money that the banks received from the Treasury was mostly not paid by you. It was never YOUR tax dollars. Seriously, why are you here?
@166 – As bad as 2008 has been, both GS and MS came out in the green for the year. So by your criterion they do deserve a bonus. Suckers.
fuck you all. lawyer baller here
@136 – after you got the last Wall-Mart Greeter application, what was there left to do?
You all are idiots. Please don’t lie about and inflate your numbers on a thread like this. You’ve heard what MS is doing this year (for associates, at least)??? Total 2008 comp is 50% of 2007 comp. As in, if your base in 2007 was 100 and your bonus was 120, then your total for 2007 was 220 and therefore your total 2008 comp is 110. Meaning, YOU GOT A BONUS OF 10,000 BEANS OVER YOUR BASE.
168 The reason that they’re “in the green” is that they’ve cut comp (i.e. salary and bonus) significantly. Jezz, is that so hard to understand? Comp is such a big part of expenses that, through the bonus process, it gets manipulated to make sure that the firm makes money.
@169 – “lawyer baller”
Wow.
@169 – I sincerely hope that you, “lawyer baller”, are not in corporate law. Because your day will come, son… very soon. Your entire existence relies on the finance industry. Feckless nitwit.
CS said to use illiquid securities to pay bonuses!
How about this…
LOL . imagine getting this bonus from CS.
Credit Suisse to Use $5 Billion of Illiquid Assets for Bonuses
2008-12-18 15:19:20.118 GMT
By Christine Harper
Dec. 18 (Bloomberg) — Credit Suisse Group AG’s investment
bank has found a new way to reduce the risk of losses from about
$5 billion of its most illiquid loans and bonds: using them to
pay employees’ year-end bonuses.
The bank will use leveraged loans and commercial mortgage-
backed debt, some of the securities blamed for generating the
worst financial crisis since the Great Depression, to fund
executive compensation packages, people familiar with the matter
said. The new policy applies only to managing directors and
directors, the two most senior ranks at the Zurich-based company,
according to a memo sent to employees today.
“While the solution we have come up with may not be ideal
for everyone, we believe it strikes the appropriate balance among
the interests of our employees, shareholders and regulators and
helps position us well for 2009,” Chief Executive Officer Brady
Dougan and Paul Calello, CEO of the investment bank, said in the
memo.
The securities will be placed into a so-called Partner Asset
Facility, and affected employees at the bank, Switzerland’s
second biggest, will be given stakes in the facility as part of
their pay. Bonuses will take the first hit should the securities
decline further in value.
Credit Suisse said earlier this month it would eliminate
5,300 jobs and cancel bonuses for top executives after it had
about 3 billion Swiss francs ($2.8 billion) of losses in October
and November. Unlike larger Swiss rival UBS AG, Credit Suisse
hasn’t received a government rescue. Banks and securities firms
are struggling to pay employee bonuses after taking more than
$800 billion of losses on mortgages and corporate loans.
Outside Investors
Credit Suisse is the first to use the debt to pay employees.
Outside investors may also be permitted to invest in the
facility, according to the people familiar with the matter, who
declined to be identified because the plan hasn’t been made
public. The bank will boost the potential for returns by
providing leverage to the facility, and will be paid back first,
according to the people.
Leveraged-loan commitments on Credit Suisse’s books fell to
between 2.5 billion Swiss francs and 3 billion francs by the end
of November from 11.9 billion francs at the end of September,
Dougan said on a conference call on Dec. 4. He said the bank had
also “somewhat reduced” its commercial real estate positions.
Credit Suisse had 12.8 billion francs in commercial mortgages at
the end of September.
Fund Management
Assets in the facility will remain on Credit Suisse’s
balance sheet and will be held in the company’s fund management
division, the people familiar with the plan said. The new
structure will mean that any mark-to-market losses or gains on
the assets will be offset by identical gains, or losses, on the
bank’s liability to employees.
Employees will receive semi-annual coupon payments on their
investment in the Partner Asset Facility at the London Interbank
Offered Rate plus 2.50 percentage points. The ultimate value of
the facility will be determined over the next eight years as the
loans and securities mature or default, the people said.
“Cash payments representing distributions of a portion of
the award may be made to participants in the future contingent on
the performance of the underlying assets,” Dougan and Calello
said in the memo. “Cash distributions will not be made for
several years.”
The bank said it expects to begin annual payments after five
years.
While Credit Suisse doesn’t say how many managing directors
and directors work at the investment bank, the number is in the
thousands.
Credit Suisse said it will also change the cash portion of
bonuses for all of the bank’s managing directors and for
directors in the investment bank. Under the new system, the bank
will have the right to recoup some of the cash bonus in the two
years after it’s paid if an employee resigns.
LOL . imagine getting this bonus from CS.
Credit Suisse to Use $5 Billion of Illiquid Assets for Bonuses
2008-12-18 15:19:20.118 GMT
By Christine Harper
Dec. 18 (Bloomberg) — Credit Suisse Group AG’s investment
bank has found a new way to reduce the risk of losses from about
$5 billion of its most illiquid loans and bonds: using them to
pay employees’ year-end bonuses.
The bank will use leveraged loans and commercial mortgage-
backed debt, some of the securities blamed for generating the
worst financial crisis since the Great Depression, to fund
executive compensation packages, people familiar with the matter
said. The new policy applies only to managing directors and
directors, the two most senior ranks at the Zurich-based company,
according to a memo sent to employees today.
“While the solution we have come up with may not be ideal
for everyone, we believe it strikes the appropriate balance among
the interests of our employees, shareholders and regulators and
helps position us well for 2009,” Chief Executive Officer Brady
Dougan and Paul Calello, CEO of the investment bank, said in the
memo.
The securities will be placed into a so-called Partner Asset
Facility, and affected employees at the bank, Switzerland’s
second biggest, will be given stakes in the facility as part of
their pay. Bonuses will take the first hit should the securities
decline further in value.
Credit Suisse said earlier this month it would eliminate
5,300 jobs and cancel bonuses for top executives after it had
about 3 billion Swiss francs ($2.8 billion) of losses in October
and November. Unlike larger Swiss rival UBS AG, Credit Suisse
hasn’t received a government rescue. Banks and securities firms
are struggling to pay employee bonuses after taking more than
$800 billion of losses on mortgages and corporate loans.
Outside Investors
Credit Suisse is the first to use the debt to pay employees.
Outside investors may also be permitted to invest in the
facility, according to the people familiar with the matter, who
declined to be identified because the plan hasn’t been made
public. The bank will boost the potential for returns by
providing leverage to the facility, and will be paid back first,
according to the people.
Leveraged-loan commitments on Credit Suisse’s books fell to
between 2.5 billion Swiss francs and 3 billion francs by the end
of November from 11.9 billion francs at the end of September,
Dougan said on a conference call on Dec. 4. He said the bank had
also “somewhat reduced” its commercial real estate positions.
Credit Suisse had 12.8 billion francs in commercial mortgages at
the end of September.
Fund Management
Assets in the facility will remain on Credit Suisse’s
balance sheet and will be held in the company’s fund management
division, the people familiar with the plan said. The new
structure will mean that any mark-to-market losses or gains on
the assets will be offset by identical gains, or losses, on the
bank’s liability to employees.
Employees will receive semi-annual coupon payments on their
investment in the Partner Asset Facility at the London Interbank
Offered Rate plus 2.50 percentage points. The ultimate value of
the facility will be determined over the next eight years as the
loans and securities mature or default, the people said.
“Cash payments representing distributions of a portion of
the award may be made to participants in the future contingent on
the performance of the underlying assets,” Dougan and Calello
said in the memo. “Cash distributions will not be made for
several years.”
The bank said it expects to begin annual payments after five
years.
While Credit Suisse doesn’t say how many managing directors
and directors work at the investment bank, the number is in the
thousands.
Credit Suisse said it will also change the cash portion of
bonuses for all of the bank’s managing directors and for
directors in the investment bank. Under the new system, the bank
will have the right to recoup some of the cash bonus in the two
years after it’s paid if an employee resigns.
I bet young guys at MS/GS wish their bosses could be as innovative as CS.
Who cares about analysts? They’re cannon fodder.
Who cares about analysts? They’re cannon fodder.
@169 “lawyer baller”
Ha! Lawyers are not ballers. Ever. Lawyers are custodians.
Guess how many bankers spend their time reading a lawyer thread?
Zero, even in this market. ‘Nuff said.
@169 “lawyer baller”
Ha! Lawyers are not ballers. Ever. Lawyers are custodians.
Guess how many bankers spend their time reading a lawyer thread?
Zero, even in this market. ‘Nuff said.
3rd yr associate bonuses are around $150k
@169
Ha! Lawyers are not ballers. Ever. Lawyers are custodians.
Guess how many bankers spend their time reading a lawyer thread?
Zero, even in this market. ‘Nuff said.
@169
Ha! Lawyers are not ballers. Ever. Lawyers are custodians.
Guess how many bankers spend their time reading a lawyer thread?
Zero, even in this market. ‘Nuff said.
Just remember….”They are kind of a big deal”
I think 183 is about right. If headcount is similar and total comp pool is down 50% then you will have to make 50% less than last year?
I hear larger % than usual is in stocks that vest over 5 years. is that the case for even VPs and Associates?
Everyone needs to calm down. The numbers are bad, but not awful. They will be worse next year. And yes, working in finance IS different than working a regular job.
I agree with 188. 2009 will be worse than 2008. 2010 might be worse than 2009 even. There will be a paradigm shift in finance compensation for good.
technology first year analysts (joined mid 2007) at GS got no increase in base and less than $6k bonus. that’s almost the same bonus as last year (when our pro-rated numbers came to about that).
190, Stub should have been about 20k for analysts? that’s still about 11k after tax isn’t it?
Dont mean to be too technical. Just want to make sure I understand the story right.
I have been hearing GS people getting about 50% cut from what they received last year. Considering people have been getting about 30% increase yearly the past few years, that is about 70% lower than what they would have received this year under 2007 environment.
But then 2008 and going forward will not resemble 2007
191, pretty sure that was either
a. a joke
b. he works in IT
c. he has no clue what he is talking about
#190 here.
191 – the answer is b unfortunately. :(
We got 5-6K each (so around 3-4K after tax), and we hear it was roughly the same all round in tech for our year.
Which pretty much sucks for us.
#165
If you didn’t read it, then how did you know if it was “douchy” (in your elegant prose) or not?
See, that’s the kind of weak mental arithmetic that sent you to Chico State in the first place.
From the grapevine, 2nd year GS analyst (class of ’07): 15-30k (“full year”) so about 8-15k prorated. They moved to the stub system to get on cycle with everyone else.
I guess this is what 2nd years at other banks have to look forward to in june.
#194
Have you seen the chicks at Chico State? Thats why I went there.
-Chico State Coed Baller
How much did the technology VP’s make this year ?
How much did 2ns year Associates in Word Processing make this year?
heard that top brass in FICC got 100% in stock
200th
controllers got 2k
$700-900k bonus for GS VPs sounds high. Citi at $400-600k in 2007. Is there that much of a differntial in talent? Not sure what to believe on this tread. Maybe GS is where it is at…
@ 188,189
Are we sure that bonuses for 09 are going to be worse than 08 across the board? For example, I have talked to people at BB S&T desks who have had record years (FX and Commodities) and their bonuses are only down 15-20% and expect bonuses to be back to ’07 levels in 09 and better than ’07 in 2010.
Given that the write-downs are over and LIBOR is coming down, won’t the earnings environment for IBD and S&T be better in 09 than in 08?
2008 Wall Street Comps Survey
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