SPEAKER_02 0:03

The OneSearch Podcast. Insights and opinions on the subjects that matter. In global infrastructure, financing and investment. With the OneSearch Credit Practice.

SPEAKER_00 0:21

Welcome to the third in our OneSearch podcast series looking at compensation in the world of infrastructure credit. In the previous podcast, we looked at the aspects around base and bonus for more senior members of the infrastructure credit community, directors and MDs. And in this podcast, recorded here on Wednesday, the 17th of March, St. Patrick's Day, no less, we will look at the aspect of regional variation. How do uh compensation packages for such individuals vary across the world from um continent to continent, within continents, from country to country, uh perhaps even from city to city? I am joined, as always, by what are we G?

SPEAKER_01 1:18

The most diversified credit team.

SPEAKER_00 1:23

That's one way of looking at it. But can you can you put it any more uh accurately, Namisha?

SPEAKER_04 1:28

The most diverse credit team.

SPEAKER_00 1:29

The most diverse. We are diversified as well in other ways, but we are the most diverse team in infrastructure credit recruitment worldwide. Don't let anyone tell you otherwise, or indeed forget that. So uh GSTAR in uh New York, uh NAMI and Mercedes over in London. And we're gonna need all their expertise because between us and between them, there's a there's a huge wide range of coverage. Last uh podcast, we talked about rangers broadly. Clearly, we've already gone through Carrie, where that comes in, the role of that long-term incentive, uh, the fact that there are really three different levers and three different aspects to a compensation package, and that is the base salary, the short-term incentive, and the long-term incentive. But really, what we want to look at here is how those packages vary. Is there in this, if we can say, the post-COVID era of flexibility and agility? Some people might say, well, it doesn't matter where I am, uh, in order to do if I can do my job well remotely, uh, it shouldn't really matter where I am. So I think it's a really topical conversation, this conversation around where is someone based? Where are they deemed to be based? Where physically are they and where do they live? And how does that have uh an impact and a bearing on what they get paid for doing that job? Namisha, to start with you, what do you think in terms of the issues that you see, just broadly to start with, in that emia market that you cover, is it fair to say that London is head and shoulders above any other market um in terms of you know in terms of compensation in infrastructure debt?

SPEAKER_04 3:22

Yeah, I think that is very fair to say. I think the London, London market is head and shoulders above in terms of both beta and bonus, just total compensation um when you compare it to any other European city. Yeah, I think that's that's completely fair to say. Why is that? I think cost of living is one factor, and I think the second factor probably comes down to taxes, but there's sort of no getting away because there are there are cities um in Europe that also have high taxes. Um maybe cost of living isn't so high, but it just seems that London is a financial hub, it is the financial hub. So that that is therefore why, and and I guess the competition as well, right, in London is is vast um in terms of of people wanting to live there. So I think those factors kind of put into one it are basically the main reason why London pays much more.

SPEAKER_00 4:20

It's interesting, right? Because one way of looking at that might might be well, look, if there's a huge supply of candidates because people want to live in London, it should be less difficult for institutions to find good candidates, and therefore, with less pressure on that, maybe there'd be less pressure on compensation. But I think what we see, don't we, is a market where there just becomes an intense fight for the best talent. And that has, we've seen it, haven't we, um, consistently over many years. But absolutely recently, as the interest in investing in infrastructure credit from new entrants has exploded onto the scene. Existing infrastructure credit houses have drastically increased allocations. We've seen a war for talent, haven't we? And and that war for talent has very much been going on in London. Is that fair to say?

SPEAKER_04 5:14

Yeah, definitely.

SPEAKER_00 5:15

So the, you know, in terms of the the European, if you think about your clients in other European cities, what's their approach to that? How do they uh how do they approach the the subject of they know that the the that London's the major talent pool? They're not based in London, they're based in places, fantastic places like Cologne or Paris or Amsterdam or you know any of these fine cities. How do they approach that that problem of of having to try and attract people from London?

SPEAKER_04 5:47

Yeah, I think some of them struggle, um, in in all honesty, uh, because it just isn't isn't as competitive. But I think that the approach that most of them have is to try to be as flexible as they can. I mean, we've seen that recently. Mercedes is done a hire quite recently in in Cologne. They've had to sort of be flexible to get the right candidate on board, um, albeit, I mean, that they've paid pretty well, I guess, in comparison to the rest of the European market. But I think being flexible is one. And the reality is some candidates are are keen to kind of go back to their home country, let's say, or native country, but a lot of candidates want to stay in London because that's where things are the most competitive, where they're going to get paid the most ultimately. Um, so I think our clients do or do come up against this, and it's just about what factors can they kind of utilize that they have over London, which ultimately uh maybe is just sort of flexibility and sort of working from home, etc., albeit over the last year that hasn't really been a factor, or we've had a couple of clients, um, well, one client in particular um in the European city that has had to be very competitive on the base salary, but they're an outlier um within the market when you compare it to the rest of where the rest of the European market. But to get talent from other European cities and from London, they've had to be very, very competitive.

SPEAKER_00 7:14

So, Namisha, and I'll come to Mercedes in a minute to talk about that uh instance in Cologne because I think it's a really interesting one. But before we do that, let's just put some numbers around this. So we we talked on the last podcast about the uh hard numbers uh for MDs in London, and we said that £200,000 is the absolute bargain basement. You know, if you're trying to hire an MD on £200,000 base salary, you are shopping on the sale rail of MDs, and uh and realistically, you're looking in the 225 to 275 range as a base salary. Um, but you know, that goes up to 350 and beyond, depending on the institution, depending on the mix when it comes to the the the short-term incentive and the long-term incentive. So if we take that range as you know broadly 200 to 350, how does that translate to major European cities?

SPEAKER_04 8:15

Yeah, quite different. So in for an MD, um, in Euros, you're roughly looking around the 150 to 225 mark in terms of base salary.

SPEAKER_00 8:27

Wow, and that's and that's euros you're talking about. Yes, that's euros. And bearing in mind that 150,000 euros is about 135,000 pounds, just to convert that to pounds, you're going from a 200 to 350 bracket, where 200 really is scraping the barrel, all the way down to 135 to 200 as a direct comparison to to it to a Paris, for example.

SPEAKER_04 8:48

Yeah, exactly. There are a couple of outliers within that, but that is where the vast majority of of the market are in Europe.

SPEAKER_00 8:56

Okay. And then um, if we look at directors, the the London range that you gave us on the last podcast was 120 to 200 broadly. How does that play out in Paris?

SPEAKER_04 9:05

So the European market, Euros 80 on the base, up to about 130 on the base.

SPEAKER_00 9:13

Wow. Okay. So again, I mean, consistent, you know, in its relativity, I guess, to London, but a big drop. Those people, I mean, perhaps that explains your your previous point. People who are of a another European nationality based in London, perhaps they reach that point in life where they they think about moving back. They've got young families, for example, uh, want to be near the grandparents, all those sort of natural stages of life that people go through. They've got to really want it, haven't they? To you bearing in mind the sort of pay drop they're going to take.

SPEAKER_04 9:42

Yeah, definitely. Definitely.

SPEAKER_00 9:44

And I think for me, that was one of the, you know, people ask me around Brexit. Do I think that um, you know, we'll see this exodus of talented people from the infradebt market in London? And I was that's one of the reasons I was very confident in saying that we would not. Um, just because that's where so many of these people have got great lives and and and routes in London. They don't want to leave. Um, but even if they do, it's uh there's a there's a real struggle readjusting to uh to those markets, even after you consider any effects around taxes or general cost of living, when you start to think about uh, you know, disposable income left over, there's a big drop in uh in making some of these moves. Look, that's interesting. Are there any exceptions, Namisha? I mean, I've got one to talk about which isn't about a location, it's just about an institution which we can't name. And that is, you know, Mercedes has, as you mentioned, recently made a placement in in Cologne, one of many that we've made with the same business in Cologne. And Merck, for what was a sort of, you know, senior VP, junior director opportunity in Infocredit, these guys were paying what I thought was you know not far off the London rate, even though they're based in Cologne. Not only that, but they were uh they were offering flexibility. So, you know, tell tell tell us more around that. That's that's really stands out, doesn't it?

SPEAKER_03 11:16

Uh for for the um for this role they were paying um 140,000 euros total comp. So for a junior director based on you know uh our director range for Europe, 80k from 100 to 130k, it would be um yes, uh higher than than the range that we did give you. So definitely more competitive. And in addition to that, they did offer the candidate, you know, that flexibility and support.

SPEAKER_00 11:51

I think that particular organization takes a view that they're much higher on fixed comp, less of a focus on any bonuses though, right?

SPEAKER_03 11:59

Yes.

SPEAKER_00 12:00

I guess that puts a different complexion on that on that situation. Yeah, that's an organization that comes out very strongly with a high base, and perhaps that makes up for a lower a lower bonus, whereas some other institutions in uh in continental Europe maybe will will make up for the shortfall on their base salaries with a bonus. Is that fair to say?

SPEAKER_03 12:22

Yeah, yeah. I mean, I came up across uh I can I I saw candidate, I spoke to candidates in Germany who were at the same level as the the candidate who we placed, who were on a base of 100,000 euros and then were expecting 20,000 to 30,000 on their on their bonus. But then sometimes they uh then they said, well, we don't know if we're gonna get paid that bonus. So um the candidate that we place has that certainty. So the candidate ended up getting 120,000 on the base, so so higher than her counterparts based in in Germany.

SPEAKER_00 13:06

Okay, and considerable flexibility as well, which I think we are seeing now a greater flexibility, aren't we? Across the market broadly, I think it's fair to say, but perhaps that is a you know, as Namisha said, perhaps that's a a tool that you know organizations are using if they know they've got it they've got to compete against uh the allure of London. Moving across to to New York, I mean, let's first of all bridge that gap, shall we, between London to New York before we then go further into the the Americas market. Again, anchoring ourselves on uh on Namisha's 200 to 350 base salaries, right? Base salary range. Gee, remind us, remind us the base salary range for the for the same uh candidates in in the New York market.

SPEAKER_01 13:54

Uh for a director, we're looking at 200 to 250 base, 75 to 100% bonus for an MD, 300 to 400, possibly even more than that, um, 100 to 400% bonus.

SPEAKER_00 14:12

I asked myself, I look at that as a direct currency translation. And I think to myself, in the director range, it's pretty clear that if you multiply the London salary by today's exchange rate, which is in and around 1.4, there's a premium on being in New York. I think as we come to other uh podcasts looking at more junior uh hiring that's going on, we will see that the the more junior you get, the more true that is. Certainly in the sort of you know, one or two years of experience bracket, there's a huge premium on being in New York. But then again, there's a there's a great cost attached to being in New York as well. But I asked myself, gee, the the the MDs, if you're an MD and you're on 350,000 pounds in London at the top end of the bracket, and you multiply that by 1.4, that takes you up to half a million dollars. And and we're not seeing MDs on half a million dollars uh as a as a any with any sort of regularity in the infrared market, are we?

SPEAKER_01 15:12

That would be the high end of an MD.

SPEAKER_00 15:14

Yeah, I mean, for me, the the bottom end of the MD market in New York is, as you say, high 200, 300. And realistically, it's in that 325 to 375 bracket for me in most of the institutions that we work with. 300 to 400 is a bit broader, but tell me if you think I'm wrong, G. I don't see much in the uh, you know, in the uh in the 400 plus range. Yeah, no, I would agree with you, you know, and again, another aspect that we're going to cover is material risk takers. That'll be another podcast, but that has had an influence within the banks on uh on pushing up base salaries. But I do just come back to this point that I think when we talk about regional variation, there's been a perceived wisdom that the best compensation is in New York. There's a premium on being in New York. So I do ask myself, you know, at that MD level, if there is any advantage uh to being in New York over London. I think that is pretty questionable, certainly on the base salary. Moving on, gee, thinking about how New York compares to other cities in America, what would be your uh overriding thoughts on that?

SPEAKER_01 16:26

I don't see much of a difference if you're comparing it to Florida, Texas, California. Um, at least when you're looking at the credit funds. I think that that's a big reason why folks during this pandemic, you know, I'll be honest, I think people, especially around tax season, have plugged in their numbers to check different locations and got a bit depressed if they're in New York, realize they can be making the same amount of salary, going to a state where there is no income tax and picked up their family and left. Um, so no, I my answer is no, for certain locations, especially within credit funds, I don't see a difference.

SPEAKER_00 17:03

But that's you know, people who've gone down. I mean, we we know many of them, don't we, who just packed up the packed up the uh the station wagon and drove down to uh to Florida. That's a very short-term temporary thing at this point in time. That's not you know, they haven't gone and and and got a new job in Florida, have they? They've just packed up their car and driven to Florida. So I'm not really sure that is the the comparison. I think if you compared a New York domicile business and someone working there to a uh you know an infradebead fund in Miami, for example, would you see a difference if someone's uh based in Miami has gotten a job and signed a contract to be based in Miami? Do we see a difference then?

SPEAKER_01 17:48

In compensation, no, I don't see a difference.

SPEAKER_00 17:50

Why do you think that is?

SPEAKER_01 17:51

It's a good question. I think um, I mean, listen, I don't see a difference with the compensation that they're offering. I do know there's a difference in their lifestyle because they're not paying as high taxes as you are in New York. I mean, listen, I I would move to Florida too. I'd I think once or to move down there, but I don't have an answer to why there is why you might.

SPEAKER_00 18:12

They've got, I mean, if you if you do the uh the analysis, they've got better weather, they've got lower taxes, very business friendly. I've certainly got a much better governor. That's my own personal opinion.

SPEAKER_01 18:23

I think they can be more competitive. I mean, hey, they're rents probably, their rent's probably cheaper. Yeah. There you go.

SPEAKER_00 18:29

So why aren't businesses then, G? So your your um hypothesis is that an infrastructure debt fund goes and sets up in Miami and thinks, hey, you know, that's fine. We'll we'll just pay people the same as they would get paid in New York. Why is that?

SPEAKER_01 18:41

It has to be attractive or else you won't go.

SPEAKER_00 18:43

Yeah, look good. I mean, look, I agree with you. And in terms of the evidence that we have in the uh you know increasing number of firms that are that are looking to base themselves out of Florida, that would I would agree with what you say. I think perhaps there are upsides to those businesses uh being based in in places like Miami. And perhaps they think, well, look, you know, we will extend those upsides through to our people. So it is perfectly possible, and we are seeing it more and more. I agree. I I think the same, you know, the same principle extends to Houston and Dallas, other areas in Texas where businesses, specifically funds, are setting themselves up where you can, as a candidate, get hired on the same compensation structure that you would in New York, but have lower taxes and a cheaper cost of living.

SPEAKER_03 19:36

And I'd like to chime in on that a bit more because I do understand that Florida is less expensive compared to New York, but at the same time, in the last in the recent 10 years, um, there's been like a real estate boom in in Miami, and it's just like mental, you know. So I think that it's cheaper if you are like me and you came from like Washington Heights or like, you know, normal 170th Street, environmental rightly.

SPEAKER_00 20:07

It's not upstate, it's just up town.

SPEAKER_03 20:10

But but if you want to live in the nice neighborhoods and go to Whole Foods and eat at the nice restaurants, I mean, you guys went down to Miami, the prices have creeped up and are creeping up. So I think that our candidates would expect an even better quality of life and buying power, and that's been on the rise um in Miami. So I think that that's the reason why these funds have to stay competitive because you know, Miami has now realized like these rich people are moving down here, or these these bankers and these funds are moving uh down here. So they're putting up prices, and there's a lot of you know demand from on that end.

SPEAKER_00 20:52

I I couldn't agree with you more. And uh it certainly it certainly would concur with the analysis of candidates we're working with, doesn't it, guys, with with uh looking into moving um moving their families down to Miami and and so on and so forth. But I just think it dispels a myth. And the myth is, yeah, you know, um you're gonna you're only gonna earn the big money if you're in New York. I think we've seen the end of those days. Uh, I really, really do. Gee, tell us, uh, how does New York going to the West Coast, how does New York compare to the major hub over there, which would be San Francisco?

SPEAKER_01 21:27

Yeah, it's still the same, even with the banks, it's still the same. I mean, listen, I speak to these candidates and I talk about their rent. There's really not big of a difference. So uh the banks, the project finance banks, if you want to be specific, they're offering the same, same base and bonus as well.

SPEAKER_00 21:42

Okay. So um, parity between New York and San Francisco. Where is there any difference then, G? Where do we in a if we look across America? Surely we're not saying that that, you know, if you're an MD or a director, wherever you work, regardless, you'll get paid the same. Because I think we would then see a huge Exodus from New York. I mean, we already are seeing one, but yeah, of some sorts. But it surely it must it must logically follow that particularly working for the banks, there must be some reason to be in New York. I mean, where would you look across America and see much lower compensation?

SPEAKER_01 22:18

Well, for first, um, just to back a step, I do think that people are attracted to New York because I mean, say what you want, there are more opportunities in New York, right? Look at all there are clients, and you know, you when we go back to meeting people, you want to be able to pop out of your building and meet someone. Definitely more activity in New York right now. Will that change over the years? Quite possibly. Um, if you're looking at, and to answer your question, if you're looking at places that really don't pay, I mean, it's like those inner cities, like uh I guess Colorado, Dengentilow, like right, that they're not paying as much. But in effect, they have a really tough time recruiting and getting people to work there. Sure, it's great. If you love skiing, it's really cheap. Private school is cheaper than anywhere in the states. But it also, I mean, if you're not paying, then you're still kind of in that net of it is expensive if you're not getting paid well. So I would I would name that as a state. I don't know if you've if you know any other states that pay lower than that.

SPEAKER_00 23:21

So it's not yeah, I don't think it's a situation that states pay higher than the next state, is it? It's it depends on the organization, right? I mean, I I think that's for me, that's the the point is that it comes down to the attitude of the employer. And if an employer says we're gonna go and set up camp in Florida, but we're just gonna pay people New York rates, which we've seen, that then becomes potentially very attractive. With other employers, I sense there's a feeling, look, let's go to Colorado, let's go to Denver, because you know it's gonna be much cheaper to operate out of that, and we can we can hire people and pay them less. You know, and I can think of a couple of institutions who've maybe made that exact decision, but I you know, I and I then see a d a difficulty hiring them. Yeah, unless someone's got a very specific reason to want to go back to Denver, I think this whole conversation mirrors the European conversation with Demisha that New York is it has been and is the London in that scenario. Uh, it is the place that draws young people in, there's loads to do, people grow roots there, people feel like they become New Yorkers. It's a gravitational pull that's been very hard for people to resist. That said, I think we are now seeing people resist New York, leave New York, move to other places far more freely than we're seeing people leave London and go off to other places in Europe. That's my view. You know, I think there are, and one of the things that's facilitating that, I think there are certain aspects around New York, certainly over the last 12 months, that uh have led to people who live there wanting to leave, uh, that are related to the pandemic and other things. But I also think that it's down to other cities and other organizations who've left New York making it attractive to leave by making that compensation equally as attractive in places that are potentially more desirable to be when it comes to weather, taxes, and yeah, and other matters. It's not true across the board. As we say, there are there are many instances where businesses across America are in the flyover states and do not uh offer particularly attractive conversation and and really, really struggle to attract good people in the same way that you know, for example, Luxembourg or Brussels do in Europe. Good. So look, anything else to anything else to add, girls? I mean, like anything you want to throw in there to try to spice up this podcast?

SPEAKER_04 25:52

I don't I don't think this one's very spicy. I'm not gonna lie. I think um I think the next one will be chat about COVID and stuff like that, but this one's just there you go.

SPEAKER_00 26:02

There's a that'll keep you listening, won't it, people? There you go. Namitha's promising some spice on podcast four. Uh and I just think there's no, you know, no better place to leave this podcast than Namisha Sharma personally promises that when she talks about COVID, I'll give you a sneak preview when she starts talking about which institutions uh have used COVID as a reason to screw people on their bonuses last year. Uh, that's going to be worth tuning in for. So at that point, we will uh I will end it here. And uh any questions, please follow up on the website. We'll be happy to engage.

SPEAKER_02 26:39

For more information on any of today's topics, or to contact the OneSearch team, please email the OneSearch Podcast at podcast at one-search dot com