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Want to work for Moelis & Co? Want to work for Winton Capital Management? This is how much you’ll earn

David Harding, likes real world statisticians

David Harding, likes real world statisticians

If you lose your job from an investment bank, in either corporate finance/M&A and sales/trading, your preferred course of action will probably be to seek a replacement in either an M&A boutique or a hedge fund.

The good news is that such re-employment is happening for the fortunate few. Ian Smillie, for example – head of RBS’s banks equity research team, was ousted from RBS in its February equities evisceration, and it’s come to our attention that he reappeared at Marshall Wace in August.

Separately, and as we noted last week, some M&A boutiques are hiring. Today, both the Financial News and the Financial Times feature interviews with Ken Moelis of boutique M&A firm Moelis & Co.

Moelis says he’s still recruiting.

“This is a good time for us to be expanding,” Moelis tells the FT. “You have to take time to get to know your clients and establish relationships. That way we will be well positioned when activity picks up.”

“I’m always thinking about the next incremental hire,” Mark Aedy, head of EMEA banking at Moelis, tells Financial News.

Compensation and losses at Moelis & Co

It’s probably no coincidence that Moelis’s spate of interviews coincides with the release of the annual accounts for Moelis & Co LLP for the year to December 31st – nor with the fact that these accounts don’t look too good.

In the year to December 2011, partner headcount at Moelis increased from 8 to 15 and other headcount increased from 48 to 83. Nevertheless, revenues  fell 4%. Over the same period, the company made an operating loss of £8.7m, up from £1.9m the year before. When partner remuneration is factored in, the loss at Moelis jumped to £18.5m.

Ken Moelis has a justification for this – and it sounds a lot like the justification used by the M&A bankers at Bank of America – M&A success takes time; it can’t be rushed. “This is a unique business,” Moelis tells Financial News. “Your best investment banker could go two years without bringing anything in, and that’s your best guy. I can’t parachute Navy Seals out of the air to do a deal that day. Clients will do deals when it is right for them.”

This being the case, Moelis appears duty-bound to pay his ever-expanding band of M&A bankers. Average partner compensation at Moelis last year, including ‘members remuneration charged as an expense’ and share allocations, totalled £883k. Average employee compensation at Moelis totalled £202k. Even though Moelis isn’t bound by the FSA’s remuneration requirements, it defers stock for between 5 and 8 years.

Compensation at Winton Capital Management 

Moelis isn’t the only place to have released accounts over the past few days. Winton Capital Management has also emitted figures for the year ending 31st December 2011. It did a lot better than Moelis.

Like Moelis, Winton has been hiring. As we’ve noted before, Winton is very interested in recruiting scientific researchers who can analyse complex datasets. Over the past year, Winton’s headcount went from 195 people to 218. 97 of these were researchers, 24 were salespeople and investor support professionals, and 97 were operations and admin professionals. While the average investment bank has a ratio of admin staff to revenue earners of 2:1, Winton’s is therefore more like an ultra-efficient 0.8:1.

Unlike at Moelis, Winton’s hiring appears to have paid off. Profits over the period rose from £132m to £162m. Average compensation per head rose from £278k to £360k. Winton has a scheme for paying in options, but no options were issued last year. The implication appears to be that compensation was mainly in the form of cash.

Comments (1)

Comments
  1. The phrase “Average compensation per head” is a very bulky. Do you simply mean compensation per head? The average compensation per head IS compensation per head, i.e. total comp pool/heads.

    This is also a terrible statistical measure for wages in certain cases. Investment management salaries tend (along with other financial salaries) to have a skewed distribution. The median wage is often a more interesting figure.

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