Relatively common in 2006 and early 2007, bonus buyouts are now a thing of the past - except, perhaps, for Jeff Herbert-Smith.
Long-time Citi-banker Jeff Herbert-Smith quit his home of 19 years for JPMorgan just before Christmas, and only weeks before bonus numbers are announced.
A spokesperson at JPMorgan said Herbert-Smith will be responsible for credit and rates and foreign exchange.
JPMorgan declined to comment on whether Herbert-Smith garnered a sign-on bonus (or buyout) to replace the payment he walked away from at Citi, but for bankers leaving voluntarily before payday, such compensatory packages have been commonplace - until recently.
Caan Krsztew-Ivanow, a senior search consultant at Melbourne-based financial services specialist Graeme V. Jones & Associates, says most banks are avoiding buying out bonuses this year in anticipation of picking up staff who've been let go, or who leave voluntarily after bonuses are paid: "Because of sub prime, there's going to be a lot of people coming out."
Mary Grant, principal consultant in recruitment firm Hudson's banking and finance division, also says the Herbert-Smith case is a rarity this late in the bonus cycle, with most banks preferring to wait until bonuses have been paid out before hiring.
The exception comes when there are big holes to be filled, in which case banks may decide it's worthwhile paying someone to move immediately: "It's better to spend a few hundred thousand dollars to bring someone on board rather than take the risk of losing millions of dollars in business," says Grant.
With some senior staff now on six-month notice periods, buying out bonuses at a late stage can seem worthwhile when the business case is compelling - banks who wait until bonuses have been paid could be hanging on until July or August.
Krstwe Ivanow says Herbert-Smith would have been signed up long ago, before the credit crunch happened: "The deal would have been done and dusted in June last year."