Good morning! Jackie Luo, an engineer at Square, has opened up herself to some “radical transparency” by posting her own compensation details on Medium. It’s by way of introduction to her project of benchmarking men’s salaries in order to give women (mainly women in technology) an understanding of what the going rate for the job is, and to therefore have more of an opportunity to demand equal pay.
It turns out that Jackie, who only has three years of experience, is earning $233,097.51 (exactly) a year when her salary and stock are taken into consideration. This is comprised of $130,000 a year in salary, plus stock which was initially valued at $47,500, but has since risen in value (and may yet fall again). Jackie is, then, paid rather well. - Particularly when you consider that third year analysts in investment banksare paid around £113k ($150k).
We occasionally get similar data on how women are paid relative to men in the banking world, although they tend to come out as the result of equal pay lawsuits or in bankruptcy proceedings. We also have the top risk takers data provided to regulators in Europe, and there is of course a whole industry (which pays surprisingly well itself, apparently) in compiling and distributing suitably anonymised industry-level compensation award data for the benefits of bonus setting bosses. Wouldn’t it all be so much easier if we just do what they do with Swedish tax records and make everything public so everyone can have a look?
As well as considerably benefiting women and minorities looking for equality, there would be a considerable benefit to the simple sanity of the industry, and a huge saving in time spent driving ourselves crazy about what we think other people might be earning. Rather than speculating, backbiting and gossiping, we could all look it up on the corporate intranet and find out yup, Jim-Bob got paid $100k more than you did last year. Armed with that knowledge, you can either ask the boss for $100k more in the next year’s bonus round, or shut up about it.
Presumably, the reason employers are so hostile to this kind of transparency (many banks actually put it in your contract that you are forbidden to share your compensation details with other employees) is that they presume that everyone would choose the first option rather than the second. That might be a misestimation of human nature. It is all very well to schedule a meeting to tell your boss “I’m just as valuable an employee as Jim-Bob”, but there would only need to be a few blunt retorts of “no you’re not” before frivolous attempts were discouraged.
Perhaps the trouble is that as a species, humanity can only handle so much reality. What we would end up with is a world in which everyone was paid roughly what they were worth. How intolerable does that sound? With no status insecurity to drive us on, no feelings of impostor syndrome to temper our egos, and the thrill of bonus season replaced by a single, awkward fact driven conversation with a middle manager, or possibly a robot. It’s a lovely idea, but we would never cope with it.
Separately, unpleasant fact-driven conversations are likely to become the order of the day at Merrill Lynch as "numbers guy" Matthew Koder takes over as head of the corporate and investment banking division at Bank of America, and staff do not seem to be looking forward to the experience.
Self-styled numbers guys have a pretty mixed reputation in investment banking. At their best, they take out waste and dead wood and force dysfunctional institutions to address hard questions that they have been sweeping under rugs for years. At their worst, numbers guys create much more dysfunction than they identify, by second-guessing everyone, demanding short term results from long term relationships and sweating every upward and downward tick of the inevitable volatility of the industry.
When a deal goes unusually well, the numbers guy notices it and demands a repeat performance every quarter from now on. When a trade goes bad, the numbers guy is immediately asking dozens of questions about risk limits. Koder is described as “internally focused” rather than “a client guy”, but his mission is apparently to ensure that ML wins “its fair share” of M&A and capital markets business from its clients. Let’s hope he’s the good rather than the bad kind of numbers guy, but it’s an unpalatable truth that the success rate of numbers guys in investment banking is directly related to how bad things were before the numbers guy took over, and from the employees’ point of view, their successes can be as painful as their failures.
Bloomberg has live video from a not-very-full conference hall at the Saudi Future Investment Initiative https://twitter.com/JavierBlas/status/1054673980026687489 and the latest details on who went and who didn’t (Bloomberg)
…as the World Economic Forum reminds us that we shouldn’t use the word “Davos” for any seminar series not organised by them and taking place in the desert, for example (WEF)
…And the whole episode couldn’t have come at a worse time for Goldman Sachs, which has just finished a major program of investment in building up its brand with Saudi decision makers (Financial News)
As UBS lifts its ban on private bankers travelling to China, Citi and JPM have asked their staff to “reconsider” going there (Bloomberg)
Moelis & Co are talking bullishly about hiring in “pretty much all of our sector groups”, after a good Q3 set of results (Financial News)
Dagmar Kamper Borens is leaving Credit Suisse, following the decision not to have an IPO of the Swiss domestic operations (Finews)
Jes Staley’s Barclays investment banking division is beginning to win over some of the doubters …(Financial News)
…but Deutsche is still the subject of tough pieces speculating on its ability to continue to exist as an independent bank (WSJ)
…although it is hiring a cloud computing specialist from the Bank of England (FT)
In a promotional interview for his forthcoming memoir, Paul Volcker says that banks are “in a stronger position than they were, but I don’t know how much they’re manipulating” and continues to call for more supervisory powers (NYT)
And Goldman Sachs is sponsoring a group of ex-Navy Seals who have created an anti-bullying program (which is targeted at bullying in high schools rather than in elite special forces units or major investment banks) (CNN)
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