Who gets them? How does this get structured into an interview / package negotiation? Anyone here who gets one who can shed some light?
I’ve asked for and received a guarantee before. I’ve also made them word it in my contract that I will receive a bonus of AT LEAST $X for the calendar year plus will be considered for additional compensation subject to the standard discretion of the firm etc etc. Depending on your experience and your position of power in the negotiation I don’t think its unfair to ask for a guarantee. I’ve also tried to get a higher base with less bonus with little luck but it depends on the shop and how their compensation is structured. At my newest employer, the base is several times more than what I’ve had before (ER), but my bonus expectations are nil or very little.
I’m not really any kind of expert on this, but I would think that the only real reasons that would justify a guaranteed bonus are: 1) You’ve been bought out of another company or another expected bonus payment, and therefore are being compensated with a bonus as an enticement to switch firms (possibly forefitting your other bonus. Usually these kinds of guarantees are good for only one or two years. or, 2) Your firm has cash flows that are unevenly distributed throughout the year, but predictably so, and therefore it makes sense to make a higher payment on your base at a particular time of year. Accounting and tax situations may also make it sensible to have a lump payment from time to time. It may also be that the company can get out of making certain kinds of overhead payments if part of the base is paid as a bonus rather than as a monthly salary. In these cases, the guaranteed bonus is really for the benefit of the company, not your benefit. You’ve also sold them an option so that if you quit before bonus time, they don’t have to pay you. Other than that, “guaranteed bonus” is an oxymoron. Bonuses are supposed to be for superior performance. Bonus means “good” in latin. No good; non bonus est.
kcin Wrote: ------------------------------------------------------- > I’ve asked for and received a guarantee before. > I’ve also made them word it in my contract that I > will receive a bonus of AT LEAST $X for the > calendar year plus will be considered for > additional compensation subject to the standard > discretion of the firm etc etc. Unless you’re a trader or otherwise have a clear way to point out outperformance, you’ll never get more than $X.
Sure if you can’t demonstrate any outperformance you won’t get anything more but you also won’t get anything less. $X is likely much better than $0.
Also, some portion of non-guaranteed bonuses is implicitly guaranteed. If some investment bank suddenly says “sorry, no bonuses this year”, everyone will walk out.
bchadwick Wrote: ------------------------------------------------------- > I’m not really any kind of expert on this, but I > would think that the only real reasons that would > justify a guaranteed bonus are: > > 1) You’ve been bought out of another company or > another expected bonus payment, and therefore are > being compensated with a bonus as an enticement to > switch firms (possibly forefitting your other > bonus. Usually these kinds of guarantees are good > for only one or two years. Adding to this, the guarantee is usually in place because the employee is moving mid-year (or even later), yet they want a full-year’s bonus, particularly in light of having less than 12 months to add value to the new place.
So just use the bonus from the year before at current shop as basis?
Muddahudda Wrote: ------------------------------------------------------- > So just use the bonus from the year before at > current shop as basis? you should get an x% of you base as the target. the ultimate # depends upon performance and goals hit through the year. i think 10-15% is a standard window for ops.
I got a guaranteed minimum bonus for the first year at a new job. It was my first time in a bonus-heavy environment so it was a way for the employer to alleviate my concerns about the (relatively) low base. The actual bonus in my first year was 2x the minimum guaranteed. I don’t know if I would try to incorporate it into the negotiations at a future job. Probably not.
kcin, I am assuimg that you have moved to the buyside from ER. Is it a long-only shop ? Typcially, at long/short bonuses are multiples of base. Correct ?
Back when sh*t was hitting the fan, Nomura gave a bunch of ex-Lehmans guaranteed bonuses so they wouldn’t quit. Then they all quit a year later after getting the bonuses. So that might be one special case…
where would you walk to?