I was wondering, if firms do layoffs within a month before bonus time, do folks still get paid their bonus? Specifically, for the big banks that are paying out their bonuses in January or early February, assuming there are job cuts, will these folks still get their bonuses (since they were “earned” in 2007)? I’m just wondering if anyone can comment from personal experience or anecdotes. This seems like something that would be very circumstantial, or could vary from firm to firm. On one hand, I think the firms could suffer reputational or ethical damage if they sacked people a week before bonuses were expected to be paid, and didn’t give them any compensation or separation payments. On the other hand, if the firm is really doing that badly, I guess nothing mandates them to pay anyone anything, given that the bonus is discretionary. In some cases, I konw of people who got laid off a couple months in advance of bonus, but they still got what they thought would be equal to their '07 bonus as well as some severance pay. However, I also heard of one case where someone got let go a few days before bonuses and didn’t get paid anything (though, I also heard that in this one case, it was performance-related). I’m just wondering how this plays out in theory or in ethics, versus in practice. Let me know what you guys think.
check out dealbreaker from last week, rumor was ML offered no year end, 4 months severance and 25k as a bonus to VP, MD etc. could be a rumor but comments on the thread from supposed ML employees says the same
I was laid off in conjunction with a group in November one year, three months ahead of bonus time. We knew well in advance, however, and our bonuses were reflective of a full year’s performance, in addition to severance. We were at a MM firm in research, but I really haven’t heard of similar instances.
I know someone who was at a company 4 years, 11 months and got laid off. One month before he would have been 100% vested in the profit sharing. I’m sure the timing was just coincidence. 4 months severance and 25k ain’t too shabby.
not when you’re expecting a 200k + bonus
jax26 Wrote: ------------------------------------------------------- > check out dealbreaker from last week, rumor was ML > offered no year end, 4 months severance and 25k as > a bonus to VP, MD etc. could be a rumor but > comments on the thread from supposed ML employees > says the same Damn…
jax26 could you also point me to the dealbreaker article? thx
I had to layoff a colleague recently. We were given a list of does and don’ts. The severance included 2007 bonus. Generally bonuses can be between 70-150% of a target amount (which in itself is a % of your base). In this case, the person would receive the minimum amount (70% of the target). The bonus will be prorated for the # of days worked in '07. All in all, considering the circumstances, I thought it was a fair package. I guess it depends on the terms of your employment, at firms where bonuses are made out to be completely discretionary, firms might be able to get out of it (They would most likely face reputational issues as Numi pointed). At our firm, there is a certain % of bonus (albeit a small amount), which is earned i.e. part of regular compensation and an argument can be made that the employee can hold the bank responsible for it.
Numi, see the second article “Layoffs Hitting ML” http://www.dealbreaker.com/banks/merrill_lynch/ Also check out the comments section
thanks no_slogan and delhirocks for the feedback. anyone else here have opinions?
any other thoughts here? some people in this forum actually work on wall street right? thx
I was let go in 2006, a few weeks before bonus payout. The employment policy said if you were out before payout, no bonus, but they paid me anyway, I guess, as a part of severance package. If there were performance issue, they might not have given me that. That being said, I am/was not working on Wall St.
i work on wall st and heard the ml rumor
jax26 Wrote: ------------------------------------------------------- > i work on wall st and heard the ml rumor understood. i was just noting the dearth of commentary from other people here…i’d figure a topic like this would be more active
I think it depends what role you played in your own layoff. When the head of FICC gets fired at ML, he deserves nothing since he basically played a role in creating this mess. When an analyst helping structure CDOs get laid off because ML was #1 in CDO underwriting and now that business is dead, he or she deserves some money. I have a friend who just graduated from NYU and went into FI sales, well this person got placed in structured products and is now awaiting dismissal. This person didn’t choose strcutured products, I think this person deserves some money as well. That my $0.02…