The Great Expectations Gap: Why 57% of Bankers Might Be in for a Bonus Reality Check

"Expectation is the root of all heartache." William Shakespeare

Good Morning,

• If you are looking to hire, I can be reached at [email protected].
• Wall Street appears to be holding its breath as the 2024 presidential election approaches. Everyone seems to be keeping their cards close to the vest until they know who'll be setting the rules for the next four years.
• Investment banking compensation expectations for 2024 reveal a striking disconnect between banker optimism and market fundamentals, with 57% of surveyed bankers anticipating bonus increases despite the challenging conditions that plagued the markets earlier this year. Although the M&A market is improving, the financial impact on bonus numbers will most likely be pushed to a 2025 event. The mismatch is particularly evident in the detailed breakdown: 36% of the 612 surveyed bankers expect 10-15% increases while another 21% project even more ambitious gains of 15-20% – figures that appear increasingly unrealistic given M&A volumes remain 13% below the decade average.
• Goldman Sachs's recent compensation patterns offer a telling preview of the likely outcome: their 9% rise in total compensation against just 1% headcount growth points to an increasingly selective reward environment, where top performers may capture a disproportionate share of the bonus pool while others face significant downward adjustments.
• The market backdrop presents particular challenges for bonus pools, evident in the persistent lag in M&A activity which, while improved from being 25% below the decade average earlier in the year, still sits 13% below historical norms. Management teams face the delicate task of retaining top talent without overcommitting bonus resources in an environment that simply doesn't support broad-based increases, pointing to a likely bifurcation where select rainmakers and critical team members receive preferential treatment while others face flat or declining bonuses for 2024.

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Recruiting Update

If you are looking to hire, I can be reached at [email protected].

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Recruiting is starting to slow as we approach the holiday/bonus season. I have new roles in Energy Transition, Healthcare M&A and FIG (asset mngmt and spec fin) M&A for elite boutiques that must be filled ASAP. Please review the detailed job listings and desired qualifications by clicking HERE.

• The recruitment landscape heading into 2024 shows a marked evolution in hiring priorities, particularly within specialized sectors. Energy Transition, Healthcare M&A, and Financial Institutions Group roles are emerging as hot spots, with elite boutiques actively pursuing talent in these areas. The traditional emphasis on brand-name experience is giving way to a more nuanced evaluation of candidates' concrete deal experience and technical modeling capabilities. Deal completion timelines are under increased scrutiny, with extended transaction periods now raising red flags in candidate profiles. This shift comes at a critical time as high-performing associates and VPs eye potential post-bonus moves, creating a delicate balancing act for management teams trying to retain top talent amid modest bonus expectations. The market appears to be entering a phase where strategic positioning and specialized expertise will likely trump general market conditions in determining individual compensation outcomes.

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