The 300k factory: Mac loses compensation crown
Macquarie is no longer Australia's compensation king and this could cause retention problems, according to a new report from Nomura. But, say headhunters, the firm is sticking to its current remuneration policy, which it thinks will work in the long term.
Group compensation per employee is A$300k, the lowest of the seven banks surveyed by Nomura analyst Victor German. Deutsche Bank tops the list at A$600k, followed by Goldman Sachs, UBS, Credit Suisse, JP Morgan and Morgan Stanley.
Macquarie's profit-share model doesn't produce high comp when market conditions are difficult, says the report. The firm cut its pay forecast in February because of slow equity trading.
The Nomura research warns that Macquarie risks losing good employees because of its low pay packets .
"Macquarie's Australian staff do seem underpaid comparative to the street. It has become a defining issue," says a headhunter, who asked not to be named.
Although the group's global headcount rose in 2010, mainly due to North American acquisitions, it has lost a handful of senior bankers - such as Andrew Low, the chief operating officer of Macquarie Capital - in Australia during the past 18 months. This has been partly driven by restructuring and natural attrition, and partly by compensation, says the headhunter.
But don't expect a mass exodus this year. Another senior recruiter describes Macquarie's current compensation levels as a "just blip in the market". Because the firm has paid high bonuses in the past, he expects most of its bankers will stay on board and wait for earnings to improve.
"Macquarie is very simple. It has always paid lower bases because usually it pays higher bonuses than most investment banks. Will this change? No," he says.
And losing a few bankers isn't always a bad thing. "Macquarie may be a little happy about this because if it has a weak financial year, cuts may have occurred," he adds.
The Nomura report also notes that Macquarie has more bankers than the business can sustain in the current market. But it is optimistic about the firm's long-term growth, in particular because of its presence in Asian markets.
