CY 2017 Investment Banking Compensation & Culture Survey Results

Duke University, The Fuqua School of Business

Cornell University, SC Johnson College of Business
May 2018

Contacts:
Ben Thomason
Managing Director
Experiential Learning
The Fuqua School of Business
ben.thomason@duke.edu
(919) 660-8017
Dawn Shaw
Sector Director, Finance
Career Management Center
The Fuqua School of Business
dawn.shaw@duke.edu
(919) 660-8010
David Capaldi
Senior Associate Director
Career Management Center
SC Johnson College of Business
dbc3@cornell.edu
(607) 255-9449
 Letter to our Participants

This is our 6th annual compensation survey. It has really grown since the beginning and we are very excited to announce our new
partnership with Cornell. Cornell has been a great partner this year, and we are happy to share this data together.

Our purpose has been to provide a service to bankers that are in the field. We also appreciate the desire for more granular data, while
preserving the confidentiality of our participants. We asked questions to capture data that would support needed changes in the
banking industry from a cultural perspective. It is of particular importance to develop talent that are both competent and great leaders
in this space. We hope this survey gives you information and transparency to build a better work environment and reputation for the
banking industry in general.

From a very high level, the big takeaways are as follows:

We have grown the number of respondents, and we are now at 200

While Fuqua and Johnson are the most highly represented schools, the survey contains a diverse representation of alums from a
majority of the top 25 MBA programs

There are over 40 investment banks represented in the survey summary including bulge bracket, independent advisory firms
(focused on large deals), and middle market firms. To understand trends in these categories better, we are providing medians and
percentile rankings by firm type, where practical. In median pay, independent advisory firms are leading the pack as a group.

A big cultural trend this year is around the topic of hiring as opposed to last year, which was work/like balance

Ultimately, we hope this is a resource that you find of value as you navigate your banking career, and we thank you for making this
possible through your participation. This is an industry survey and includes alums across many top business schools. Please help us
in building this base by having your referrals email us to be added to our distribution or let your school know that you would support a
formal partnership with this initiative.

Sincerely,

Ben Thomason
Dawn Shaw
David Capaldi

Page 2
 Survey Participation Included 200 Entries Across Over 40 Firms

How did your firm pay? Selected Firms Represented

Only 16% of respondents believe that their firm paid above “The Baird Greenhill PJT Partners
Street,” and within that group, some firms often mentioned BML Guggenheim Piper Jaffray
included: BAML, JPM, Harris Williams, Lazard, Moelis, PJT. On Barclays Harris Williams RBC
the flip side, 33% believe their firm paid “below” Street; top vote BB&T Houlihan Lokey Simmons & Co.
getters included: Barclays, DB, Jefferies, Morgan Stanley, RBC, BlackArch Partners HSBC SunTrust
SunTrust, Wells. J.P. Morgan Wells Fargo
BNP Paribas
Work/balance vs. pay: BTIG Jefferies Williiam Blair
19% of respondents would be willing to receive 20% less pay if Centerview KeyBanc
they could only reduce their hours worked by 10%. We interpret Citigroup Lazard
that about 1 in 5 bankers values time more than money on the Credit Suisse Lazard Middle Market
margin. However, 37% of respondents would be willing to work Deloitte Corp. Finance Moelis & Company
10% longer to earn 20% more pay. Looks like comp, is still the Deutsche Bank Morgan Stanley
primary incentive. Evercore Nomura
Goldman Sachs PJT Partners

Firm Type Group Types Represented

2%

8%
13%
Bulge Bracket 7%
Industry

Middle Market M&A

18%
Independent Advisory Leveraged Finance
26% Firm (large deals)
59%
Other 67%
Other

Page 3 Investment Banking Compensation & Culture Survey

 Cultural Observations

Cultural observations and themes

This year there were many comments around hiring, developing a better morale and creating work place norms.

STAFFING
The majority of comments were about hiring more people. Some commented on the competency of those that are being hired, some were
about bringing in more diversity, while others were changing how banks hire. Specific comments included, hire more people, spread work
around evenly and develop more senior people, external hiring, hire more mid-level and junior level, hire for admin jobs, better job at
recruiting diversity, hire international students, and higher people who can lead.

MORALE
Morale is a consistent challenge when working long hours and in a high-stress environment. Although, last year this seemed to be the most
talked about topic. This year, we are still seeing it being commented on, but not nearly as much as the staffing model. Specific comments
included, be more welcoming to women, better communication about advancement and seniors/juniors, and there is too much negativity.

WORK NORMS
Work place norms was a theme around protecting time and encouraging more team-based activities. Establishing or changing work norms
can be slow and often effect morale. Some examples, we captured were ideas on having nap pods, two week vacations, enforce work
policies, no weekends, work from home, more social/fun activities, improving talent management, more career coaching/development and
alignment in groups, plus having more transparency.

OUTLOOK
The employment horizon continues to look robust as 40% of respondents expect their group to add headcount in 2018, while only 10%
expect their group to reduce net headcount.

In conclusion, while it is interesting to see the compensation structure around banking, when work norms and morale are low, it can often
lead to questioning if compensation is worth it. By trying to improve staffing, morale and work norms, its possible to create an environment
where it satisfies both experience and compensation and would prevent talent from leaving, which was also a comment made around
staffing concerns.

For more specific comments around culture, please see the appendix.

Page 4 Investment Banking Compensation & Culture Survey

 Total Compensation Across Class Years

$900 Total compensation for the

200 survey respondents is
reflect in the dot plot to the
$800 left.

As is often the case,

$700 variation in pay starts to
widen during the VP years.

$600

$500

$400

$300

$200

$100

$0
2018
Class 2017
Stub 2016
A1 2015
A2 2014
A3 2013
VP1 2012
VP2 2011
VP3 2010
Dir 2009
Year

Page 5 Investment Banking Compensation & Culture Survey

 Compensation Trends over the Past Six Surveys

Historical Median Pay - Prior IB Surveys Associate 3 median total

compensation has
2012 2013 2014 2015 2016 2017 CAGR experienced the highest and
Stub $135 $135 $135 $160 $159 $165 4.1% most consistent growth over
the past 6 years.
Assoc 1 230 229 241 250 250 255 2.1%
Assoc 2 275 295 290 325 308 339 4.3% The heat map below
Assoc 3 280 351 383 391 400 400 7.4% illustrates the year-over-year
VP 1 360 423 451 460 450 450 4.6% growth/(decline) in median
pay for each class.
VP 2 485 438 500 499 478 520 1.4%
VP 3 418 525 600 525 585 550 5.7%
Dir 700 660 743 693 650 625 -2.2%

Year-over-year Growth Heat Map

2013 2014 2015 2016 2017
Stub 0.0% 0.0% 18.5% -0.6% 3.8%
Assoc 1 -0.6% 5.4% 3.7% 0.0% 2.0%
Assoc 2 7.3% -1.7% 12.1% -5.4% 10.2%
Assoc 3 25.4% 9.0% 2.1% 2.4% 0.0%
VP 1 17.4% 6.6% 2.1% -2.2% 0.0%
VP 2 -9.8% 14.3% -0.3% -4.2% 8.9%
VP 3 25.7% 14.3% -12.5% 11.4% -6.0%
Dir -5.7% 12.5% -6.7% -6.2% -3.9%

Page 6 Investment Banking Compensation & Culture Survey

Appendix
Calendar Year 2017 Compensation Statistics
 Definitions

• Firm Type: Self reported category and we have listed these in three groupings: 1) Bulge Bracket, 2) Independent Advisory (with a focus
on large transactions) and 3) Middle Market / Other. Each category is self identified by the participant. Within each position (or class
year), when we had more than one participant for each of these three categories, we have provided distinct median, 75th percentile and
25th percentile for each sub group.

• Position: This is the class year, or cohort. For comparable purposes, we group responses based on the cohort or grouping that the
banker is evaluated with (i.e. VP 1, VP2, etc.).

• Total: Reflects the total of both base and bonus.

• % Cash: Represents the percentage of the bonus that was awarded in cash, assumes the remainder of the bonus was some form of
deferred compensation.

• Total Comp % Change: Reflects the % increase in total compensation for the respondent from the prior year.

• 2017 % Increase: Reflects the percentage increase in base pay for 2017 relative to 2016.

Page 8 Investment Banking Compensation & Culture Survey

 Stub Associates

($ in thousands) 2017 Total Comp 2018

Firm Type Position Base Bonus Total % Cash % Change Base % Incr.

Bulge Bracket Group 30 Participants

75th Percentile $125 $37 $162 100 $150 20%

Median 125 35 160 100 150 20%
25th Percentile 125 35 160 100 150 20%

Independent Advisory Group 7 Participants

75th Percentile $150 $50 $200 100 $155 3%

Median 150 50 200 100 150 0%
25th Percentile 150 50 200 100 150 0%

Middle Market Group 5 Participants

75th Percentile $125 $57 $182 100 $150 20%

Median 125 40 165 100 150 20%
25th Percentile 125 35 160 100 140 12%

Total 42 Participants

75th Percentile $125 $48 $178 100 $150 20%

Median 125 40 165 100 150 20%
25th Percentile 125 35 160 100 150 20%

Page 9 Investment Banking Compensation & Culture Survey

 First Year Associates

($ in thousands) 2017 Total Comp 2018

Firm Type Position Base Bonus Total % Cash % Change Base % Incr.

Bulge Bracket Group 15 Participants

75th Percentile $150 $128 $278 100 82% $175 17%

Median 150 107 257 100 61% 175 17%
25th Percentile 150 93 243 91 54% 175 17%

Independent Advisory Group 3 Participants

75th Percentile $155 $175 $330 93 92% $178 15%

Median 150 170 330 85 83% 175 17%
25th Percentile 150 135 290 85 74% 175 17%

Middle Market Group 11 Participants

75th Percentile $140 $125 $265 100 64% $165 18%

Median 140 100 240 100 41% 160 14%
25th Percentile 115 98 223 100 33% 138 20%

Total 29 Participants

75th Percentile $150 $135 $275 100 70% $175 17%

Median 150 107 255 100 61% 175 17%
25th Percentile 140 95 235 90 47% 160 14%

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 Second Year Associates

($ in thousands) 2017 Total Comp 2018

Firm Type Position Base Bonus Total % Cash % Change Base % Incr.

Bulge Bracket Group 21 Participants

75th Percentile $175 $184 $359 100 37% $200 14%

Median 175 164 339 90 28% 200 14%
25th Percentile 175 134 309 80 22% 200 14%

Independent Advisory Group 6 Participants

75th Percentile $183 $234 $414 99 48% $200 10%

Median 175 210 388 96 23% 200 14%
25th Percentile 175 179 354 84 17% 200 14%

Middle Market Group 14 Participants

75th Percentile $175 $191 $348 100 40% $200 14%

Median 160 163 321 100 31% 175 9%
25th Percentile 150 141 304 100 27% 175 17%

Total 41 Participants

75th Percentile $175 $195 $365 100 38% $200 14%

Median 175 165 339 100 29% 200 14%
25th Percentile 175 140 315 82 22% 198 13%

Page 11 Investment Banking Compensation & Culture Survey

 Third Year Associates

($ in thousands) 2017 Total Comp 2018

Firm Type Position Base Bonus Total % Cash % Change Base % Incr.

Bulge Bracket Group 12 Participants

75th Percentile $200 $209 $409 92 27% $250 25%

Median 200 195 395 82 21% 250 25%
25th Percentile 200 180 380 80 19% 225 13%

Independent Advisory Group 3 Participants

75th Percentile $200 $248 $448 100 25% $250 25%

Median 200 220 420 100 14% 250 25%
25th Percentile 200 174 374 88 4% 238 19%

Middle Market Group 2 Participants

75th Percentile $196 $219 $408 100 20% $219 11%

Median 193 213 405 100 19% 213 10%
25th Percentile 189 206 403 100 18% 206 9%

Total 17 Participants

75th Percentile $200 $220 $420 100 27% $250 25%

Median 200 200 400 85 20% 250 25%
25th Percentile 200 180 380 80 17% 225 13%

Page 12 Investment Banking Compensation & Culture Survey

 First Year Vice Presidents

($ in thousands) 2017 Total Comp 2018

Firm Type Position Base Bonus Total % Cash % Change Base % Incr.

Bulge Bracket Group 17 Participants

75th Percentile $250 $270 $495 89 26% $250 0%

Median 225 220 460 80 19% 250 11%
25th Percentile 225 205 445 75 13% 240 7%

Independent Advisory Group 2 Participants

75th Percentile $238 $319 $556 100 17% $238 0%

Median 225 313 538 100 17% 225 0%
25th Percentile 213 306 519 100 17% 213 0%

Middle Market Group 6 Participants

75th Percentile $219 $269 $449 100 37% $219 0%

Median 200 250 433 90 24% 200 0%
25th Percentile 170 194 405 76 14% 170 0%

Total 25 Participants

75th Percentile $250 $285 $495 100 27% $250 0%

Median 225 245 450 80 19% 250 11%
25th Percentile 225 205 440 75 13% 220 -2%

Page 13 Investment Banking Compensation & Culture Survey

 Second Year Vice Presidents

($ in thousands) 2017 Total Comp 2018

Firm Type Position Base Bonus Total % Cash % Change Base % Incr.

Total 7 Participants

75th Percentile $245 $330 $568 95 17% $238 -3%

Median 225 310 520 78 13% 225 0%
25th Percentile 195 253 463 76 12% 200 3%

Page 14 Investment Banking Compensation & Culture Survey

 Third Year Vice Presidents

($ in thousands) 2017 Total Comp 2018

Firm Type Position Base Bonus Total % Cash % Change Base % Incr.

Total 10 Participants

75th Percentile $250 $376 $608 100 19% $254 1%

Median 225 350 550 96 13% 250 11%
25th Percentile 200 326 531 79 9% 225 13%

Page 15 Investment Banking Compensation & Culture Survey

 Directors

($ in thousands) 2017 Total Comp 2018

Firm Type Position Base Bonus Total % Cash % Change Base % Incr.

Bulge Bracket Group 16 Participants

75th Percentile $276 $436 $721 93 17% $280 1%

Median 250 375 625 78 13% 250 0%
25th Percentile 250 288 539 75 4% 250 0%

Independent Advisory Group 3 Participants

75th Percentile $275 $470 $745 100 6% $275 0%

Median 275 465 740 100 4% 275 0%
25th Percentile 268 378 645 84 3% 275 3%

Middle Market Group 10 Participants

75th Percentile $269 $475 $675 100 18% $275 2%

Median 250 313 550 100 7% 250 0%
25th Percentile 206 214 445 89 0% 206 0%

Total 29 Participants

75th Percentile $275 $470 $725 100 16% $275 0%

Median 250 375 625 90 10% 250 0%
25th Percentile 250 250 500 75 2% 250 0%

Page 16 Investment Banking Compensation & Culture Survey

 What is one change you would make if you were Group Head?

Selected Quotes:

ASSOCIATES
• Pay more attention to the development of the junior bankers
• Work life balance policies enforcement
• More banded pay within the classes. Giving someone $5k more alienates people with the same ranking
• I'll ensure that if someone worked a 90+ hours week they'll get at least one day off during the week or at least don't come into till 1 pm. Also, I would add
nap pods!
• Encourage more flexibility (having people work from home after dinner), promote more team camaraderie
• Too much negativity in the bull ben. Get rid of the negative talkers. Take more an interest in junior bankers.
• I would remind senior bankers that making junior bankers lives miserable is a good way to lose talent, no matter how much they are paid.
• Allow for more flexibility for working remotely, start working on changing the perception that people have to be available 24/7
• More one on one time with senior level bankers and junior team members
• Cast a broader net for recruiting. I believe the group could benefit from an increased commitment to diversity across the board.
• Have VPs and above do a better job managing expectations on when deliverables are needed - it isn't always right now, so maybe we can go home and
work on it in the morning.
• Stop ass-kissing
• Reduce length of pitchbooks and focus on strategic conversations.
• Hire more people who actually know how to lead
• Have more group networking / teambuilding events (and schedule them when most teammates can likely attend)
• Remove the group head -- that is all that needs to change
• Scale back junior banker initiatives
• Be more welcoming to females in our Houston group. Houston is a tough environment to break into for females hitting Wall Street.
• Hire more international students
• Improve talent management (i.e. staffing, career coaching/development, industry alignment).
• Mandatory 2 weeks vacation
• Have junior banker feedback impact senior banker bonuses, even at a minimal level, to try to influence responsible management and mentorship of
resources
• Empower juniors (VP and Director) to source and drive deal flow
• Focus on more metrics around hours spent on project engagements vs. revenue received / engaged

Page 17 Investment Banking Compensation & Culture Survey

 What is one change you would make if you were Group Head?

Selected Quotes:

VICE PRESIDENTS
• Empower the team to build and manage relationships rather than being deeply involved in every single account - damages team morale, disincentives
entrepreneurial spirit and creates superficial client relationships
• Streamline status quo work streams to improve efficiency
• More VP development, client interaction, travel opportunities
• Hire more associates
• Allow people to step up and perform at the level they are capable of versus being boxed in to the rigid promotion system and levels (ie if you are a VP 1
but performing way above peers, either get promoted early or able to play director role on teams)
• Comp has to go higher for banks to be competitive. Attrition is very high and compensation is not increasing to keep talent.
• More social events
• I would schedule more out-of-office activities for our group.
• Better communication of group's strategy, hiring initiatives and personnel changes
• Fire poor performers and unproductive senior people faster.
• Figuring out how to develop talent, whether it requires bringing in a consultant or what, the amount of intelligence and work experience they let walk out
the door is mind blowing. And the longer talent is delayed before calling/bringing in revenue, the over all pie is reduced.
• Flexibility to work from home
• Make coverage responsibilities from MD down through analyst more clear in order to transform the organization into a true advisor to key clients.
• Minimize internal busywork that doesn't result in fees
• Hire better juniors. More comprehensive training.
• Fastrack strong performers
• Significant number of junior bankers leaving after payout of 2017 bonus due to zero promotions across the firm in 2017 and overall poor work
environment
• Communication with junior staff regarding business, decisions, new members, changes, etc

Page 18 Investment Banking Compensation & Culture Survey

 What is one change you would make if you were Group Head?

Selected Quotes:

DIRECTORS
• Hiring more experienced associates or junior VPs
• Have honest conversation about path to MD each year starting as Associates
• Better align headcount with targeted client work (ie, not go after business if not confident we have headcount to prosecute effectively)
• I would look to create a more competitive overall culture where everyone holds each other accountable.
• Force MD's to work without VP / Director support on some things. Would make them more accountable / realize how much the Directors shield them
from the BS and poorly recruited junior bankers.
• More hires for impartial support functions (eg staffing, administration, projects) rather than using deal team members.
• Reinstate focused Associate recruiting from business school.
• Centralize activities in Houston
• Hire better junior talent
• Better internal career development
• Better software and CRM
• Hire better junior bankers
• Give every senior banker an office

Page 19 Investment Banking Compensation & Culture Survey