With deferred compensation (Morgan Stanley and Barclays), caps on cash bonuses (Deutsche Bank) and clawbacks of previous pay (JP Morgan), a banker’s salary is not what it used to be. Some have responded by looking elsewhere for a job. But for those who decide to stick around or can’t find other work, there is another solution: work less.
Senior bankers are often paid handsomely (between $3 to $7 million) but their job is actually less than glamorous. Many investment bankers who are in the advisory business stay in the office late at night, work during weekends and vacations and travel more than 300 days a year to meet clients or make pitches to potential new ones. The sacrifices used to be worth it because they felt rewarded for their work, but—while there are still plenty of people in other professions who work similar schedules for much less money—bankers are feeling less and less appreciated.
A managing director at one bank said he’ll use the pay cuts as an excuse to work less and spend more time with his family. He traveled more than 310 days last year, which paid off in business, and his bank was on a lot of deals in his sector. But because of problems with other parts of the bank, his compensation was still cut, so now he questions whether it’s worth it. “We’re not getting rewarded for the work we do,” he said. “Instead, we’re actually being punished. So what’s the point in killing myself for my job?”
Another banker said he used to think missing his kids’ sporting events was worth it because his work allowed him to give his family a good life, including tuition at top private schools. But the drop in compensation this year, which followed pay restrictions last year, has left a bad taste in his mouth. He is reluctant to look for another job and start somewhere new at his age, so his response is to put in fewer hours in the office. “I probably miss dinner with my family at least four times a week,” he said. “I don’t feel motivated to keep that going.”
Even bosses are getting in on the act. One senior banker at a European firm said the compensation cuts have caused a lot of hand wringing on how to keep morale up, in addition to retaining and attracting talent. He recently declined to ask his team to stay late to work on a project, when in the past, he said he normally would have asked his underlings to stay until 11 pm or whenever the job got done. “If it was urgent, of course I would’ve asked them to stay,” the banker said. “But since it wasn’t and they work really hard anyway, it’s hard to ask them to stay late when they just got their bonuses slashed.”
The next shoe to drop could be the European proposal to cap banker bonuses at no more than 100% of base salary. Faced with such a drastic drop in income—from potentially several millions a year to a mere million or so—some bankers may decide that simply working less isn’t enough, and move out of Europe, or out of the industry.