Moelis Sees Talent War Driving Junior Banker Pay Hikes
(Bloomberg) -- After the biggest windfall in years for junior bankers, with starting salaries increasing by 30% or more to as much as $120,000, Ken Moelis is prepared to bump up pay even further next year.
“We’re not doing it grudgingly. Business is booming,” the founding chairman and chief executive officer of Moelis & Co. said in an interview Thursday on Bloomberg Television. “The deal flow, if it continues to rise the way it does, we need the best talent in the world.”
Moelis, which has raised pay for first-year analysts to $110,000, is among the dozens of firms increasing salaries for the most-junior rank of investment banker -- to lure new recruits and prevent others from jumping to rivals or decamping for industries with a cushier lifestyle.
Across Wall Street, first-year analysts -- most of whom are fresh out of college -- now receive salaries of $100,000 to $120,000. Year-end bonuses can push those figures above $200,000, or almost triple the U.S. median household income.
So great is the demand for dealmaking advice that the industry had little choice but to offer more money and perks such as Peloton bikes to staff who typically do the grunt work of building Excel models and preparing PowerPoint presentations. With more than $3 trillion of deals so far in 2021, mergers and acquisitions globally are on a record pace.
Moelis, who recalled making $35,000 a year and sleeping under his desk many nights as a twentysomething at Drexel Burnham Lambert, said he sympathizes with young bankers who endured long hours working from home during the pandemic. He said many are tempted by opportunities in venture capital and technology.
A similar dynamic is playing out throughout the ranks of investment banking. Evercore Inc. boosted salaries for first-year associates -- the rank immediately above analyst -- to $185,000 from $150,000.
“We definitely expect to and are paying people more than we ever have,” Moelis said. “They’re working harder than they ever have, and technology is making them extremely productive.”
In the 12 months ending June 30, New York-based Moelis spent almost $687 million on compensation and benefits, up from $559 million in the previous four quarters. It now requires so much money to run a competitive M&A business that Moelis said there’s no way he could recruit talent away from big banks to start a firm the way he did Moelis & Co. in 2007.
“I don’t think you could form another company like ours right now,” he said. “It would cost a couple of billion dollars, I think, just to unravel the deferred-compensation structures.”
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