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Where you’ll find the big cash buyouts before bonus time

Do you want to move jobs now? Even better, do you want to move jobs and have all the restricted stock you’ve amassed swapped for cash? It can still be done. It’s late November, but banks are still hiring before 2017 bonuses are paid.

As we noted yesterday, Goldman Sachs is still hiring-in managing directors from rival firms. However, Goldman isn’t the place to go if you want a cash buyout – the firm typically defers its stock for three years and imposes restrictions on the sale of stock for up to six years. If you join GS your existing stock will simply be transferred to this vesting schedule. – The big cash buyouts are on offer elsewhere. If you want one, headhunters suggest you try Jefferies.

“Jefferies are still building,” says one fixed income headhunter who works across Wall Street and London. “They’ve got a good story to tell and are amassing some very good people. They also pay bonuses that are 100% non-deferred cash up to well beyond $1m, so you have lot of people interested in moving over there.”

Jefferies’ recent hires reflect its appeal. In November alone it’s added equity analyst David Katz (from Telsey Advisory Group), equities trader Brett Finer (from trading firm Tourmaline Partners), tech bankers Bill Song (from Wells Fargo) and Erik Marth (from Morgan Stanley), and emerging markets trader Leandro Infantino (from Nomura). – All at managing director (MD level), to say nothing of additional hires in the junior and mid-ranks.

Of course, Jefferies’ cash bonuses aren’t entirely unrestricted. – The bank famously stipulates that they’re paid back in full, including tax, if recipients leave within a year. It’s not clear how this applies to buyouts of restricted stock belonging to new joiners, but headhunters insist the pay-back clause isn’t an issue. “It’s never caused a problem when I’ve placed people there,” says one.

If the prospect of paying back your entire gross bonus if you leave is an issue, however, Jefferies isn’t the only bank at the cash bonus and cash buyout party. In London, small banks (like Jefferies) are exempt from the rules which require banks to defer bonuses. – If you want cash, all you need to do, therefore, is to find another firm that’s classified as “tier three” by the Financial Conduct Authority. This includes buy-side firms like Vanguard and Brevan Howard. It also includes most boutique M&A firms.

Andrew Pringle, managing director of London recruitment firm Circle Square, says boutiques are buying people out for cash too. “We’ve just moved a vice president from a major bank for a cash buyout of £140k ($185k),” he says. “Clients are trying to build their franchises for next year. In some cases, these roles have been empty for a while and people are deciding to do a buyout now rather than waiting until 2018 when everyone else will be hiring as well.”

Cashing out of restricted stock will be particularly appealing if you’re at a bank which imposes long bonus deferrals and whose stock isn’t expected to perform well in 2018. Deutsche bankers might want to take note: the bank famously defers all pay for top managing directors for five years, and banking analysts at J.P. Morgan ranked Deutsche last in their investment bank stock picks in a note out yesterday.


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Photo credit: Looking up Wall Street by Richard Schneider  is licensed under CC BY 2.0.

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