The One Search Podcast
One Search is the original global Infrastructure search firm, and the One Search Podcast is the group's platform for interviewing special guests, as well as discussing key themes in the sector and sharing compensation data from time to time.
The One Search Podcast
Compensation in Infra Debt – MDs & Directors Part 2 (Base + Bonus)
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
The most diverse Credit Practice in Global Infrastructure recruitment discuss the mix in base salary and annual bonuses in Infrastructure Debt.
The OneSearch Podcast. Insights and opinions on the subjects that matter. In global infrastructure, financing and investment. With the OneSearch Credit Practice.
SPEAKER_01Welcome to the second in our OneSearch podcast series. We're looking at compensation within the infrastructure credit market globally. We, as I discussed on, as I mentioned on the first podcast, are the uh the most diverse team in infrastructure recruitment. And although we only had Nemesha Sharma and G uh with us on the first podcast, we're now joined by Mercedes Perez. Hello, Mercedes.
SPEAKER_03Hello, Dan. Happy to be here.
SPEAKER_01Good. Very welcome on the podcast. Joining us from London and a long-term servant of OneSearch, six years now, gluttoned for punishment. And I've seen shorter sentences for manslaughter, frankly. But here we are on the podcast. And in the in in podcast number one, we focused on carry as a component in a compensation package with infrastructure debt funds and how that might then impact the uh the general scene when it comes to a person's compensation package. Clearly, the uh the overview being that uh you know there'll be some ramification on the the fixed annual fixed uh uh component of base or bonus or both. So now that we've covered that and explained that that is something which should be taken into account, it isn't taken into account on these salary grids that you see published, but it really should be because it doesn't then uh tell a story, it doesn't tell the full story anyway, if uh if one is to look only at uh base and and bonus uh where there is carry involved. But of course, in many cases, as we discussed, and frankly, in the vast majority of cases, carry is not involved in the infrastructure debt world. It's certainly not involved in the banks, obviously, and uh there are only a few institutions at this point, although it is a growing number, there are only a few uh institutions that uh you know where Carrie is relevant. So let's get into that conversation, shall we, in terms of uh base and bonus uh and how those packages are constructed, uh where there are differences in that makeup uh between fixed and variable, and start to explore some of the themes that we that we see there. So, look, let's start in New York with G. G, maybe uh again focusing on the director and MD levels, maybe you could just walk us through in in New York City as a as a standard to start with, what base and bonus look like.
SPEAKER_02I'll just jump right into it. And what we're seeing from base and bonus, obviously there's gonna be outliers, but we'll get into that. Um, so what we see is you know the range is 200k to could go up to 250k base, the bonus will also vary from 75, 100. And honestly, even this year we've seen firms that have paid over 100%. And we can get into that and and why we've seen that as well for a couple of reasons. And I know it's a pretty wide range, right, Dan and the Misha Mercedes to say, but I would say if you're 200k base director level, you are most certainly at the lower end of the spectrum. Sorry, Jade, if if you are saying I'm sorry, if if you're at the 200 base at a director level, I would say that's probably the lowest, you're probably at the lowest band of director because there are banks, and we'll get to that in the next podcast, where VP2 or VP3 is making 200k base. Absolutely. Um and there's so many reasons for that, right? Um I'm happy to get into that now unless you guys have anything to take from that.
SPEAKER_01So look, that's that's the bargain basement for a director. 200. Um, what's the top end of director comp? I mean, I know we we know uh certainly banks, don't we, that are that are pushing above that 250. But does that if where where banks are maybe paying a bit more than that, are they is are they are they making up for something?
SPEAKER_02Making more than the 250 base?
SPEAKER_01Yeah, if if banks are paying, let's say 260, 270 bases in New York, is that because they're making up for the fact that they're a uh yeah, a lower bonus payer, for example?
SPEAKER_02Yeah, I would be definitely seeing that. I'm not gonna name any names to to banks, but most certainly we've seen and listen, it's sometimes it's a good thing. It depends on the person that especially this year, we had a couple of our clients up their bases, but when the offer came out, it was very honest and said there isn't gonna be a bonus or there'll be a minimal bonus. Some people like that security, but at the overall compensation, if you're comparing that, then you do sometimes end up lower than other banks, but sometimes the base is so competitive that it kind of keeps you aligned with the rest of the compensation in the market.
SPEAKER_01That's interesting. Is so is that is that becoming a a theme in any way that banks are being honest, as you put it, and saying, look, you know, in uh in advance, we're gonna tell you that bonuses might not look great, but let us compensate for that and give you a better than market based salary. And you're saying people are quite receptive to that because it gives them security.
SPEAKER_02You know, I think it's better than a bank saying that they're gonna give you a great bonus and they don't. Obviously, that's a variable. But I have, you know, there are those rare project finance banks that will be up front and say, listen, probably aren't gonna be given a great bonus. But I've seen that the bases are it's good to have that guaranteed base salary um coming in every week, and there is no variable with that, and people are comfortable with that. Depends on who you are. Some people like the bonus perspective, but not many banks, Dan, not many banks are honest with it.
SPEAKER_01Well, look it, you know, in my experience, people people love the idea of having a high base, yeah. But uh, you know, the ones who have a high base then moan if they don't get uh a high bonus, and the ones, you know, the uh the ones on a lower base, even if they get a great bonus, still moan that they didn't have a higher base. So it's hard, I think, but it's hard for institutions to win. But look, uh, you know, we'll we'll come on to what we're seeing this year uh as as a you know as a comparison maybe to last year in in those bonus percentages, but just as a standard G, before we get into that, yeah. What sort of in that director band then? And you're saying the band is really 200 to 250 with some some outliers at the top end of that, but within that director band, what sort of bonus might might a project finance banker in New York expect?
SPEAKER_02Yeah, so the that'll also you want to do usually we'll see 75 to 100%. Once again, outliers we've seen more than 100%, we've certainly seen less than 75%. Um, and that comes into take. I think strategy might come into that. Some of these banks that do more portfolio management execution, they might have lower bonuses. Banks that want to retain their folks will probably give them good bonuses. I rarely, as a search consultant, uh I rarely get calls saying, Oh, I got a great bonus and it's time to leave. Um, they usually stay a while if they're doing well and they're compensated for their work.
SPEAKER_01Okay, thanks for that, G. In still staying in New York, looking at MDs.
SPEAKER_02And you know, as we then progress up into the MD bracket, perhaps you can run us through um, you know, what do you see as the as sort of standard uh around base and bonus that so MDs on the lower range would probably be 300k base, once again varies with outliers, um, 400 being the top part of an MD um base. And that once again, we'll see in the MD range. There are outliers on the upside, depending on factors, including um carry or not getting a bonus, like we had mentioned before, there are banks where that will just really up the base salary with a minimal bonus, or if you're a material risk taker, um, that's another thing that we've seen quite a bit of time where their base salary is increased on the variable of the bonus.
SPEAKER_01Okay. So you're, I mean, really, if we uh were to assume that MD base salaries are grouped in, and I think it is fair to say, isn't it, that they're grouped into maybe that 325 to 375 sort of sort of bracket there. And 100% bonuses are commonplace, perhaps 200% bonuses are a lot rarer, and you know, bonuses in excess of 200% are extremely rare, but do occasionally happen. Then is it fair to say, do you think, G, that the uh the sort of total compensation range for MDs in that New York market is sitting between maybe 750, 800, up to sort of 1.2, 1.3 million dollars at the upper end?
SPEAKER_02Yeah, depending on the on where you work, I think that comes into play too. If you're like an elite boutique, sometimes they get paid more and the overall compensation, but I would agree with that.
SPEAKER_01If you work for a run-of-the-mill, middle of the road, sort of project finance shop, maybe maybe closer to the 758 end of the spectrum, yeah. And what about the I mean, are we are we delving into the bargain basement? Is that are there any uh areas of the market where you see MDs getting paid less than that? I mean, $550, $600 total compensation.
SPEAKER_02Yeah, um, that's another thing. I mean, I'd love to get everyone's opinion on this as well. I don't know if you guys seen this, but sometimes an MD's been there their entire career. Unfortunately, sometimes they get taken advantage of. And I, you know, I know MDs that are getting paid less than 300k base and they've been at a firm for 15 plus years. Um, I don't know if you guys have seen that at all yourselves. Yeah, definitely.
SPEAKER_04We see that in in London. Um, not only at the MD level, but at the director level as well. Um, it's quite apparent. And then when they they go out to higher in the external market, the difference between the director in the team's base salary and and what they can offer out in the market is also very different. There's a stark contrast between the two. Um, so yeah, I think some people, it's not in every organization, um, but some people that have been in organizations for a for a while do sort of get punished almost.
SPEAKER_01Yeah. What I what I love is when you when you make a hire into an organization and and there's exactly that disparity between what's the market and what other people at that same level are earning in a in an institution. And the institution says, oh, well, look, we're now gonna have to up the the packages of the of the people, the existing people, to match because we don't want to hire someone externally to do the same job and pay them more. But those are you know, those scenarios are few and far between. Yeah. And I I could tell many, many stories of where someone, frankly, more junior, less qualified, less experienced, is brought in on a higher compensation package than than people within that team. And I it's hard to disagree, uh G, with your assertion that those people are almost being punished, aren't they, for their loyalty?
SPEAKER_02All right, yeah, it's an unfair world that we live in.
SPEAKER_01Um Mercedes, I know you're a staunch supporter of fairness in in compensation. What do you what do you think about that? What's the moral of the story, Mark?
SPEAKER_03No, I mean they're businesses, so obviously um they have to look at costs, and and um if someone's happy to to be at a firm and doesn't leave, then I guess it it means that they're happy with the the compensation. We've seen banks um where a lot of the French banks where the only way that you can get um a uplift is if you come in with a with a with an offer from another bank. So um, you know, those things I've seen those things happen before at at um at director level, um, and then they reject, then they reject the the the actual role that that we had for them. So it's like goes again, they're happy to just stay in that bank. So um, so I think that, yeah, I mean it's it's never fair, but I think that if you have really good skills, I mean that's why we're around, we're kind of sniffing and seeing, and then we'll just get you out to market to get you a better compensation. So that's why I feel I'm the first one to believe in fairness.
SPEAKER_01Absolutely. So, but it's funny, isn't it? Why do those people stay, Mercedes? Why do people who know, frankly, they know they're being underpaid, they in some cases even know that other colleagues, uh, peers at their same pay grade have been hired in on better packages than them. Why do they stay? It's almost like Stockholm syndrome exists in the project finance market.
SPEAKER_03I just think maybe sometimes people get comfortable and maybe they don't believe in, you know, the people just get comfortable and they just have their everyday lives and a lot of the roles that we um have at more senior levels. We're pitching them like, look, you have to go and build out a business and work really hard and prove yourself. So I think that that's a big mental leap for a lot of people to take, even some jobs in the um in the investment side. We've we've had people who've begged us for those jobs, and then we come with the perfect job and great compensation, and then they turn them down because you know they just stay in like the same bank that they've been in for for years. So I think that maybe is a bit of the um the imposter syndrome as well happening, but um, you know, it doesn't happen all the time. But I think that that's that's the case, it's just human psychology.
SPEAKER_01And can and people in their comfort zone. Um, and it's it is. I mean, look, if you're if you're uh working for a business, you've been there a long time, you're doing a great job, you shouldn't have to, you should you shouldn't have to come out of that comfort zone and go work somewhere else, and as you say, step out and deal with the fact that you've got to go and re-establish yourself somewhere else and and build relationships with a whole new bunch of people just to make sure that you're getting paid fairly. But um, you know, perhaps that's the conclusion here. That's the moral of the story, that in order to make sure you're pegged to the market, maybe that is what you need to do um with some institutions. Good. Well, look, we die, we digress. I uh I want to move to Namisha in London and talk about the the bandings for base and bonus there and uh Nami.
SPEAKER_04Yeah, so touching on the director level base salaries will range from the lower end um around the 125 pounds mark um in terms of base. Um and then where we see the upper end is around sort of the 185 pounds base. There are outliers on those those numbers. So there are directors in the market getting paid 100k base. They could have been at their current shop for a while. Um, that could be a reason, but but there are other factors I think that go into that.
SPEAKER_01Sorry, Nami, 100,000 pounds. I mean, even at today's FX rate, which is the the the best it's been in in a long time when it comes to the dollars you can buy for that, puts you at 140,000, which puts you, you know, really in associate territory. I mean, really directors at 100,000 pounds?
SPEAKER_04Yeah, unfortunately, I know a couple um that uh that are at that range. It's not it's not one outlier that I'm talking about. Uh and it's not any lower than that.
SPEAKER_01Can you raise me? Can you get me any lower than 100?
SPEAKER_04Maybe by about 5,000.
SPEAKER_01Sub 100,000 pounds sterling base salaries at director level now, and we shall not name clearly the institutions HSBC. Uh we we we shall not name the institutions that pay terrible base salaries, but uh is there a theme, Nami? Is it you know, is it because they're particularly small institutions? Is it because they are perhaps uh have a very small amount of capital to deploy? I mean, get make sense of it for us.
SPEAKER_04Yeah, you would think that. I mean, uh one of the shops institutions um is a bit of a smaller player. Um, and I think it's a stable place to work as well. I think in that role, it's unlikely you'd see redundancies um or anything to that nature. In the other organization, interestingly, they've got a global reach. They look at deals um across the whole of EMIA. And yeah, I mean, there there is risk of uh redundancy, let's say, because we've seen it in the past with particular organisations. So unfortunately, there isn't something that makes it obvious as to why they pay well or not. I think with that particular organization, it's just because individuals have been there for a while and are just seriously undermarket um rather than their strategy or anything to do with the institution. Um in that case in particular. Um but yeah, then then moving on to kind of bonuses um at the lower end, around 40% is where we see the bottom of the market at the director level. Um, and then going up to 100% is is sort of the top end of the market. Again, outliers um exist uh at the bonus range. Uh this year in particular, we've seen less than 40% for institutions, but then we've seen above 100% for a couple of the debt funds out there um in the market as well. So again, there there are outliers on that side.
SPEAKER_01And then you might have people closer to 200 pounds with a uh, you know, 100% plus on the bonus. Really, we're saying that the the range is in total compensation terms sub 200 to over 400 pounds.
SPEAKER_04Yeah, exactly. You do have some shops out there that um pay better on the base um and they have a higher base figure. And and with those, there are lower bonuses um because you've got that that guarantee of a base. But yeah, there I wouldn't I wouldn't say it's an easy, easy kind of bracket, to be honest with you. There's loads of different factors that go into it. There are the top institutions out there, and they're at the top in terms of that 185 plus 100%, if not 115% base salaries, that's top of the market. A couple of the debt funds are at that level. Um, and maybe one or two of the banks as well. But yeah, there's there's a lot of factors that that go into it, basically.
SPEAKER_01Okay, look, that's really interesting. I would I mean, one thing that I'm uh sort of you're quite keen to discuss is that that disparity. So I think this is the point of a podcast discussion like this versus a grid that tells us what the range is. Trying to explain that range, trying to explain why the Gulf is so uh wide when essentially a lot of these guys working for different institutions but doing very, very similar jobs, essentially, is that I mean, is work-life balance a thing? Oftentimes you talk to people and say, Oh, you know, and you speak to people who who say, uh, I know I'm in the sort of paid at the lower end, but I have a a better, a better lifestyle, and you know, the place I work is a little bit more easygoing. What I'm saying is, are people, is it true that in some maybe the guys who get paid less, is it because they're expected to do less? Or and and the guys who get paid more, is it because they're just doing loads more work? Or it was like, explain to me, if not, why is the the why is there such disparity in this market? I mean, you've got some people doing very similar jobs to other people in the same city for double what someone else is getting paid. I need to understand why. Please explain.
SPEAKER_04Yeah, so I think I mean I think there are a number of factors. I in all honesty, I don't think there's one simple answer to that, but I think you've got pure lending institutions versus um institutions that do a mixture of lending and advisory. So some of the European banks, for example, um, those teams do a mixture of lending and advisory. You find them at the mid to top range of where the salary brackets are in terms of base and again mid to mid-sort of range in terms of the bonus. So compensation is is pretty good for those guys, but the hours are long because they're they're doing advisory deals. You compare that to other institutions, uh, maybe some of the big balance sheet lenders that are pure lending teams. In those teams, they might be a little bit more at the lower end of the base, sort of low to mid, I would say, of the base salary, um, and around mid in terms of the bonus. And their work life balance is better because they're a pure lending institution. Therefore, they aren't doing all the hours under the sun. Of course, they're in a front office deal focused role. There are times where you you sort of have to knuckle down and and get things done. But if you compare the work life balance between the two, it's it's pretty different.
SPEAKER_01Yeah. Okay. So uh Namitra, on that, on that note, move us up to the MD level. Uh, you know, what's the what's the entry point? And What's the range?
SPEAKER_04Yeah, so entry point for an MD um in terms of base is around £200,000. Um up to at the very top end uh around 350,000. Um so that's base, and then bonus about 100% at the low end, um, up to 300% um at the top end. So that sort of broadly speaking, again, depends on uh a lot of factors as to where your base comes in and where your bonus comes in, bonus culture, carry, some of some funds obviously have that element. So to kind of drill down, I guess, and and be specific in terms of where you would probably see most of the range, I'd say would be between the 225 mark in terms of base up to the 275 mark. I'd say that's the real bracket where you'd find most MDs concentrated at in terms of base. And then bonus, I would say, again, it's a wide range, 100% to 300%, right?
SPEAKER_01So we've got to bear in mind that the and I guess the distribution of that, if you if we could see those bonuses plotted on a graph, lots of them at 100%, some at 200%, which for bankers these days is the top end of the of the the uh of you know of the art of the possible, frankly, and then very rare 300% type bonuses in you know advisory uh uh led institutions that have had a great year or uh in you know in a in an independent debt fund that's that that uh you know can pay people in whatever way it likes. Is that is that fair?
SPEAKER_04Yeah, exactly, exactly right.
SPEAKER_01I take the point and I totally agree that the the real cluster of MD base salaries in that London market is in the probably 250 mark, 250, 275 kind of area. What puts you if what makes you an outlier, why would you be an outlier earning 350, 400 pounds, maybe even occasionally people earning slightly more? What would what would uh the circumstances be?
SPEAKER_04Uh if your your bonus um is sub 100%, basically, that that's where we sort of find uh particularly within the banks, anyway, perhaps not the debt funds, but those institutions that um are probably at the upper end in terms of the base salary for MDs uh around that sort of 350 mark are probably some are sub 100% in terms of the the bonus.
SPEAKER_01So in terms of the bonus, you mean, I mean, just to be very clear, uh, because it's not something that you can adjust, is it? The base salary can't be adjusted year on year. What what you mean there is that there's a there are institutions that pay a much higher base salary to an MD, maybe 350 in and around that mar sort of area, because they know and their culture is that the bonus will be much lower, maybe even you know, £150,000. And then the the effect of that is the combination is that you know your total comp comes in at 500, just like another MD over the street who's on 250 plus 100%.
SPEAKER_04Yeah, exactly that. Um, and I think it's just a a matter of retention, right? Um, they they want to try and keep them, so they they enlarge that that base because the bonus is is not market.
SPEAKER_01Good. There we go. Well, look, on the on the next podcast, we're gonna get into uh regional differences. We're gonna talk about those London packages versus uh their counterparts in the fine, wonderful European cities and financial hubs uh in continental Europe. And likewise, we're gonna talk about New York as the established financial center in America and how that compares as uh as organizations increasingly base themselves in uh uh Florida and Texas and various other locations, and we see that uh uh you know that inertia out of New York. How do these packages compare? But we have reached the limit for uh um the millennials, they can't concentrate any longer than this, so we've got to end the podcast here, and we will uh pick this up on podcast three.
SPEAKER_00For more information on any of today's topics or to contact the one search team, please email the one search podcast at podcast at one dash search dot com.