Morning Coffee: How to extract a larger bonus, by a banker who knows. Sam Bankman-Fried's chauffeur reveals all
It's starting to look like the banking bonus forecasts were optimistic and that bonuses might be worse than expected. While Johnson associates was forecasting flat equities bonuses and a 15% to 20% decline in fixed income currencies and commodities (FICC) bonuses, we understand that Goldman's markets bonus pool is actually down 30%. While Johnson was forecasting ECM and DCM bonuses would down 40-45% and that M&A bonuses would be down 15% to 20% on last year, Bloomberg is now reporting that major US banks have cut their investment banking bonus pools by 30% and that some people will receive nothing at all.
In the circumstances, it's good to make your preemptive outrage known early. There's still time for the allocation to be redistributed in your favour.
This appears to be what's happening with Goldman's salespeople and traders. Having learned of their greatly diminished bonus pool after what's been an exceptional year for the GS markets business, they're leaking the number and letting it be known on an anonymous basis that they're not happy and would like more of the firm's bonus pool tilted in their direction.
Similar tactics can work at an in individual level; just look at Andrea Orcel.
Andrea Orcel probably doesn't need any extra money: in January 2022 he received €51.4m from Santander after the Spanish bank retracted its offer for him to become chief executive. Nonetheless, the Financial Times reports that Orcel's "supporters" consider him underpaid in his new role as CEO of Unicredit. The Italian bank's HR team and external advisors have apparently become involved and the matter is said to be "extremely sensitive." Unnamed individuals are reported as saying that Orcel "knows how much he’s worth.” And it appears to be more than the €6.7m he received last year: Orcel's supporters would allegedly like to double his salary and to potentially double his bonus in the process if more demanding targets are met.
It's too early to know whether this lobbying will be successful, but for less rarefied bankers than Orcel, there are lessons to be learned. Firstly, know your worth: Orcel's supporters are reportedly citing the $34.5m received by Jamie Dimon as a stretch goal. Secondly, try to get someone else to petition for you - it's not a good look to be asking for more money yourself (UniCredit chair Pietro Carlo Padoan says Orcel has not done so personally), it is a good look when you have 'supporters' pointing out how special you are. Thirdly, don't go straight in and insist upon higher pay, but suggest some demanding targets that will result in that outcome if they're met. Fourthly, document all your achievements (Unicredit shares are up 45% since Orcel joined and the bank is on track to return €16bn to shareholders). Lastly, don't leave your efforts until the last moment: Orcel's salary, which will determine his bonus, is voted upon at the firm's annual general meeting in April; the campaign to justify an increase is already underway, months in advance.
Separately, some people may be disappointed to learn that Sam Bankman-Fried's existence in the Bahamas was not marked by partying, polyamorous love and amphetamines. Bankman-Fried's own insistence that they were simply into playing board games may have been correct.
Bloomberg reporter Zeke Faux spent 11 hours at SBF's Bahamian penthouse and aside from a pile of deserted sneakers and SBF's insistence that he didn't notice how much he was spending and "was real lazy about this mental math,” one of his most interesting interactions is with the chauffeur who previously ferried FTX staff around. “People make it seem like this big Wolf of Wall Street thing,” the driver declares. “Bro, it was a bunch of nerds.”
Faux also spots a transdermal patch on SBF's arm. Although SBF says he sometimes takes Adderall, he says it's not a stimulant but an antidepressant. "I’ve been borderline depressed for my whole life,” he confesses.
SBF seems to be blaming Caroline Ellison: "The problem was that Alameda had gotten leveraged. And Alameda is not, like, a company that I monitor day-to-day. It’s not a company I run. It’s not a company I have run for the last couple years. And Alameda’s finances I was not deeply aware of. I was only surface-level aware of Alameda’s finances." (NY Mag)
Asked if Alameda had continued to have larger limits than other clients, SBF said: “I think that may be true.” There “may have been a liquidation delay” for Alameda and possibly other large traders. (Financial Times)
The level of detail Bankman-Fried provided to Forbes over the years shows that he had detailed knowledge of some of Alameda’s holdings and at least some knowledge of the transactions it was making, especially in 2021. (Forbes)
Gary Gensler: "Nothing about the crypto markets is incompatible with the securities laws." (Bloomberg)
Job cuts in the US fintech sector have increased from 592 through November 2021, to 8,125 during the same period this year. (Challenger Grey & Christmas)
PWC is shutting its UK offices from Friday December 23 until Tuesday January 3 to cut its spending on heat and light. (The Times)
Credit Suisse shares rose the most for two years after chairman Axel Lehmann said outflows stopped. (Bloomberg)
Bridgewater isn't having such a good year after all. Its Pure Alpha fund rose 22% to December and has fallen 16% since. (Bloomberg)
Former UK health secretary and chancellor Sajid Javid wants to work for Pimco now. (Financial Times)
Stellar Asset Management in the UK is offering four-day weeks, partly by running shorter meetings and encouraging employees to only participate in the bits of meetings that are relevant to them. (Financial Times)
A group of bankers allegedly paid Cardi B $1m for a 35-minute performance. (Hip hop vibe)
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