On Wall Street, Base Salary Is the Smaller Part of Pay
Base salary is set by title, firm-wide, within a narrow band. “An average investment bank is going to have a pretty tight window for a director,” said Mike Mittleman, a career coach who advises financial services professionals on compensation and who spent his own career at two global investment banks. “They may say everybody at the director level makes between $300,000 and $350,000.” The bonus is what separates two people at the same title, and it is the part a group plan does not insure.
Salary and bonus also move at different rates. The first “generally goes up at about 3 to 3.5% a year,” said Johnson. Four years of raises at that pace adds about 14%. The second does not move on a fixed schedule at all. It rises and falls with performance, sometimes far faster than 14% over four years, sometimes not at all.
Fixed costs stay down and the incentive does the work. “If you only get a moderate base salary, the idea is you’ll run faster because you’ve got so much at stake based on how you do,” Johnson said.
Base-to-bonus mix varies by employer type
Hedge funds, private equity and venture capitalists pay a larger share of compensation outside of covered earnings, which means base salary here is categorically smaller.
“Banks and private equity are going to be roughly similar. The hedge fund again, you have a higher percent of the compensation coming in and bonus, so a smaller base, higher … bonus, smaller base,” said Mittleman.
“Banks and private equity are going to be roughly similar. The hedge fund again, you have a higher percent of the compensation coming in and bonus, so a smaller base, higher … bonus, smaller base,” said Mittleman.
Base salary is set by title, firm-wide, within a narrow band. “An average investment bank is going to have a pretty tight window for a director,” said Mike Mittleman, a career coach who advises financial services professionals on compensation and who spent his own career at two global investment banks. “They may say everybody at the director level makes between $300,000 and $350,000.” The bonus is what separates two people at the same title, and it is the part a group plan does not insure.
Salary and bonus also move at different rates. The first “generally goes up at about 3 to 3.5% a year,” said Johnson. Four years of raises at that pace adds about 14%. The second does not move on a fixed schedule at all. It rises and falls with performance, sometimes far faster than 14% over four years, sometimes not at all.
Fixed costs stay down and the incentive does the work. “If you only get a moderate base salary, the idea is you’ll run faster because you’ve got so much at stake based on how you do,” Johnson said.
Base-to-bonus mix varies by employer type
Hedge funds, private equity and venture capitalists pay a larger share of compensation outside of covered earnings, which means base salary here is categorically smaller.
“Banks and private equity are going to be roughly similar. The hedge fund again, you have a higher percent of the compensation coming in and bonus, so a smaller base, higher … bonus, smaller base,” said Mittleman.
“Banks and private equity are going to be roughly similar. The hedge fund again, you have a higher percent of the compensation coming in and bonus, so a smaller base, higher … bonus, smaller base,” said Mittleman.