Lest it be thought that equity derivatives professionals won't be paid well this year, a new study suggests bonuses in the sector will be up 20-25%.
The 2006 Global Compensation Report from search firm Options Group, suggests the best-paid managing directors in equity derivatives trading and structuring will receive bonuses averaging 675k to 875k for the past 12 months.
Lowly associates are forecast to receive a ceiling of 175k in total compensation. Vice presidents in the area can expect as much as 360k.
David Korn, European managing director of Options Group, says pay for equity derivatives professionals is up more than in any other area in the equities market. "Equity derivatives are a complex and profitable business for banks to be in," he says. "Higher bonuses are being driven by their use in prime brokerage and equity financing divisions."
According to Options Group's figures, equity derivatives traders and structurers are typically paid 15% to 30% more than salespeople, with the discrepancy rising at the senior end.
A rival equity derivatives headhunter says these figures are roughly correct, but err on the side of modesty. "A managing director in equity derivatives can expect as much as 1.5m," he says. "Options Group are being kind to their clients, who won't want to see them inflating expectations by posting high bonus figures."
However, he believes Options' 20% to 25% forecast bonus increases are over-ambitious: "15% to 25% is more like it."
Citigroup, UBS, JPMorgan and Credit Suisse are all expected to add to equity derivatives teams next year.
What equity derivatives professionals will be paid
Trading or structuring
Associate: Base pay 60k Bonus 60k-115k
Vice president: Base pay 70k-80k Bonus 170k-280k
Managing director: Base pay 100k-125k Bonus 675k-875k
Associate: Base pay 60k Bonus 45k-90k
Vice president: Base pay 70k-80k Bonus 140k-240k
Managing director: Base pay 100k-125k Bonus 500k-575k
· Source: Options Group, Global Compensation Report 2006