Bumper fee income for 2007, fuelled by a swag of huge M&A deals, has led to massive bonuses for some high performers at major investment banks.
Industry insiders point to some senior and junior M&A ‘stars’ snaring million-dollar-plus cash bonuses, with the so-called millionaire’s factory Macquarie Bank said to be the highest payer.
The value of new M&A deals in Australia topped US$100bn (AU$111.2bn) for the first time in 2007, fuelled by a string of large deals such as the AU$20bn Wesfarmers takeover of Coles, and the AU$17.5bn acquisition of Rinker Group by Mexico’s Cemex.
Adam Kolokotsas, segment manager of executive accounting, banking and finance for Tanner Menzies, says some people in the M&A sphere are earning two to three times their salary in bonuses, based on profit sharing from deals completed in 2007.
“I’ve heard of people earning millions of dollars in bonuses last year. It’s unreal. 300% of what they’re earning in bonuses would be a minimum for these guys in the M&A space.”
However, Luke Heath, chief executive of Chandler Heath, says there has also been a widening of the gap between the higher and lower performers.
“In previous years, where bonus pools were excellent relative to work and revenue done, you would find that the lesser performers would still be getting good bonuses,” he says. “This year people want to hold onto their stars, wherever possible, and they’re making sure that if a bonus pool isn’t as big as they’d liked, their really high performers are looked after first, and the lesser performers will be paid the same or less.”