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To: hdl who wrote (140791)	12/28/2001 3:54:10 PM
From: Knighty Tin	Respond to of 436258

hdl, Once the bonus's nose is under the tent flap, that camel is in the tent. The fact is supply and demand. If the associates will walk if they don't get their moolah, then the firm has to value their worth vs. the bonuses. Also, if the partners are declaring huge profit sharing for themselves, it makes it hard to pull the "business is bad" trick. In the money management business, at least where I worked, the higher paid folks are mostly paid with bonuses. My last two years running money, the bonus was 15-40% more than my annual salary. If somebody had said "no bonus," I would have been gone in a New York minute. In some ways, it is a good system, as the bonus is predicated on hitting some important goals. In another way, it is a bad system. Once you've paid me the bonus, I have 12 months to wait until the next big windfall will come. That is why other firms use the early part of the year to lure top players away with big upfront signing bonuses. It works differently in the brokerage business. Generally, brokers are paid about 40% or so of their gross. Some, who are on a "Training Salary," as I am right now, are paid much less of a payout and much more from the overhead budget. But, during good times, top producers are offered non-interest "loans" of 1 to 1 1/2 of their last full year's gross to switch firms. They then work off this loan by earning at about a 55% payout until they pay back the firm. So, he can earn interest on the loan until it's paid back, and the loan is a non-taxable event. The earnings are taxed, of course. But, assuming the gross remains the same, it is quite a raise in income. But, from what I've seen of the business, not in the least worth all the extra paperwork to switch firms. <g>