It’s notoriously difficult to pinpoint how much people earn in sales and trading jobs. Now non-existent search firm Napier Scott used to have a go pre-financial crisis, but the spread of compensation was always huge – unlike in corporate finance, where the range is narrower and pay is much more predictable.
Despite the challenges, recruitment firm Selby Jennings has produced some figures for total compensation in equities sales and trading. You can see their full report if you click here.
Alternatively, we’ve pulled out the key figures from Selby Jenning’s report for you below. These are for bonuses in equities sales and trading last year.
As you’ll see the range is huge – with top performers in sales and trading typically receiving twice the bonuses allocated to low performers. Bonus variations increase with seniority. Traders are always paid more than sales people. Cash equities salespeople earn the least of all. Delta one traders are among the best paid. Bonuses have clearly fallen already as salaries have risen. Kweku Adoboli was a delta one trader at director level and he earned a total package of £360k in 2008, of which £250k was his bonus. Nowadays, bonuses for director-level traders in Delta One top out at £180k. Strangely, Selby Jennings makes no allowance for all last year's zeros.
Selby Jennings notes that equities salespeople and traders in the US appear to be paid up to 30% more in the US than their counterparts in Europe, particularly in areas like flow derivatives trading. However, bonuses are typically around 50% less in Paris, Frankfurt and Milan than they are in London, and this may therefore have skewed the European figures lower.
What will happen to equities sales and trading bonuses for 2012? The poor performance of equities businesses doesn’t augur well. JPMorgan analysts are predicting an 18% year-on-year decline in equities revenues this year, although the latest projections form compensation consultant Alan Johnson suggested that equities bonuses would rise anything from 5-15% this year (we suggest he may have been wrong).
In seeming anticipation of a precipitous pay drop, Selby Jennings says banks’ equities traders are interested in moving to hedge funds and that there is more enthusiasm than previously for working in small brokerage firms.