Find all School-related info fast with the new School-Specific MBA Forum

It is currently 24 Jul 2014, 02:51

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Pay curbs for banking execs

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
VP
VP
User avatar
Joined: 09 Dec 2008
Posts: 1221
Schools: Kellogg Class of 2011
Followers: 21

Kudos [?]: 237 [0], given: 17

Pay curbs for banking execs [#permalink] New post 04 Feb 2009, 05:34
The latest from Washington's intervention in the banking sector:

http://online.wsj.com/article/SB123371587783546553.html

WSJ wrote:
Among the new restrictions being considered is a $500,000 cap on salaries for executives at companies that receive a substantial amount of government aid, according to a person familiar with the matter. Executives would be able to get additional compensation in the form of restricted stock or other compensation that is tied to the long-term health of the company.


Of course the devil is in the details, especially what qualifies as a "substantial amount of government aid", who is considered an executive and whether bonus/incentive pay would also be subject to the $500k cap.

My question to those considering banking: would this (if passed) affect your decision on which banks you'd want to work for? It seems to me that by creating price controls on labor, the government could cause some unintended consequences in terms of where talented people choose to work, with repercussions for the banks subject to the limits.
_________________

Get the best GMAT Prep Resources with GMAT Club Premium Membership

Intern
Intern
avatar
Joined: 21 Nov 2008
Posts: 14
Followers: 0

Kudos [?]: 4 [0], given: 0

Re: Pay curbs for banking execs [#permalink] New post 04 Feb 2009, 06:22
If this happens, my personal prediction is that you're going to see a huge outflow of top senior bankers over to firms like Jefferies, Houlihan Lokey, Greenhill, Evercore, Moelis, Perella Weinberg, etc. etc. Any firm that did not take government aid may be able to poach top talent and increase their size/reach, and may become a more desired employer than the former bulge bracket.

As far as me personally, I will go wherever I can get the best experience and the most exposure. If that happens to be the bulge bracket, and if I make $125-150K instead of $350K, so be it. If all of the dealflow is going to the firms I listed above, I will be looking at them instead.
SVP
SVP
User avatar
Status: Burning mid-night oil....daily
Joined: 07 Nov 2008
Posts: 2400
Schools: Yale SOM 2011 Alum, Kellogg, Booth, Tuck
WE 1: IB - Restructuring & Distressed M&A
Followers: 71

Kudos [?]: 685 [0], given: 548

GMAT Tests User Reviews Badge
Re: Pay curbs for banking execs [#permalink] New post 04 Feb 2009, 06:42
If the above legislation passes, following things will probably occur:

1) Top Undergrad/MBA Talents:
Mostly indifferent since the starting salary/compensation is still attractive for entry level positions. Many will still choose to work at IBs (under new regulation) and use the opportunity as a stepping stone to a better opportunity after 3 to 5 years. (depending on job market, market environment and demand)

2) Top IBs will have Trouble Holding onto Top Talent:
Many firms had trouble holding onto their top talents during the boom years. Even without the above regulation, top talents left to open their own firms or to PE/VC/HF and other lucrative opportunities. However, the new regulation will probably boost this trend further. Top IB talents will use IB experience as many MCs currently use their M/B/B experience on their resume. Tenure @ IBs will be shorter. However, the question is: Will this new regulation impact majority of the IB employees? Some say that the new regulation will impact very few talents (maybe top 10% of the firm's "star" employees???) with top earnings track record. Not everyone at the bank makes that much money to be impacted by this regulation.
_________________

Get the best GMAT Prep Resources with GMAT Club Premium Membership

Re: Pay curbs for banking execs   [#permalink] 04 Feb 2009, 06:42
    Similar topics Author Replies Last post
Similar
Topics:
Experts publish their posts in the topic To attempt at curbing the water hyacinth Gnpth 1 23 Jun 2014, 04:36
Exec MBA or MBA? lepium 3 11 Dec 2006, 22:39
Exec MBA or MBA? lepium 4 11 Dec 2006, 22:38
Feng invests his bonus check in a bank account that pays 20% sudhagar 6 07 Nov 2005, 19:59
Ricardo deposits $1,000 in a bank account that pays 10% sudhagar 7 12 Oct 2005, 07:04
Display posts from previous: Sort by

Pay curbs for banking execs

  Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.