Someone is doing something right. It does not seem to be Pandit.
Citigroup is denying that Trauber really has a multi-year guarantee, but the Wall Street Journal cites ‘people familiar with the matter,’ who say he really does.
If you aspire to a large multi-year payout, Trauber’s tale says several things about the optimum strategy for extracting it.
1) Be in America
Thanks to the FSA, the chance of extracting a multi-year guarantee in the UK is equivalent to Ed Miliband making Gordon Brown shadow chancellor. In the US, multi-year guarantees are frowned upon. In the UK, they are outlawed entirely.
“In the US, multi-year guarantees are still normal,” says one senior international M&A headhunter. “In the UK and parts of Europe, they are completely abnormal. And most banks are being grown up and serious enough not to issue them for fear of attracting the attention of the public.”
2) Go verbal
Despite being in the laissez faire land of the US, Trauber’s alleged multi-year guarantee is apparently not written down. According to, ‘the people familiar with the matter,’ ‘there is a verbal understanding that his pay in 2011 and 2012 will be similar to the 2010 deal, should he perform up to expectations.’
In the UK, even verbal multi-year guarantees are apparently uncommon, but they are infinitely more likely.
3) Get counter-offered
Trauber’s $30m number suggests he was already on a large sum at UBS.
According to one headhunter, he’d threatened to resign from UBS several times before and had been bought back, increasing his package on each occasion.
4) Make BIG requests
On one hand, demanding time on a private jet and a ring-fenced bonus pool for your entire team may identify you as a demanding prima donna. On the other, it shows you value yourself, think you can bring in business, and are a ‘premium product.’
According to the WSJ, Trauber said he’d only stay at UBS if it offered him: ’150 hours of access to a private plane annually and…a separate bonus pool… for his specialized team of bankers.’ According to our source, he also requested $12.5m in annual compensation, something unconfirmed by Trauber or UBS.
UBS didn’t produce the goods, and Trauber has now moved along with 10 members of his team. Citigroup didn’t relent on the private jet request either, but it does appear to have been sufficiently moved by Trauber’s requests to grant he and his team rather a lot of money.
5) Cite Trauber
Any other senior M&A bankers moving this year can now cite Trauber’s alleged $30m as a marker for the kind of thing they might be expecting too.
Equally, any Citigroup M&A bankers looking for a buyback can cite Trauber’s alleged $30m as the kind of figure they might require to stick around. The headhunter says that having lost so many senior M&A bankers already this year and tanked in the global M&A rankings, Citi’s already being quite generous in order to keep its staff.
“Every time someone goes in to resign they will cut a deal with them,” he says. “They’re at least as good as the offers they are being made from the market.” Cunningly, Citi has now pushed the market up.