Salary goldman sachs managing director: Goldman Sachs’ “deserving” new MDs on salaries of $400k-$500k

Careers, Salaries, Hours & Exits

“Then happy low, lie down! / Uneasy lies the head that wears a crown.”

(Henry IV, Part 2, Act III, Sc. 1)

When you think about the investment banking Managing Director, your first thought may be a gorilla swinging through the jungle, devouring food and crushing the Analyst monkeys.

But if you want a more accurate view of the role, you should think about Henry IV’s state of mind from the soliloquy above.

Having deposed the former king, Richard II, he now faces betrayal from the same noble families that initially supported his claim to the throne.

Confronted with rebelling Welsh, Scots, and Englishmen, plus the French to the south, Henry is so stressed that he can no longer sleep at night.

He then realizes the great irony: thousands of his poorest subjects can fall asleep, while “nature’s soft nurse” continues to elude him.

And that’s an apt summary of the Managing Director job in investment banking: yes, you’re “the King,” but you may not get much sleep at night.

The Investment Banking Managing Director: Job Description

Managing Directors have one goal: to make it rain.

They spend their time winning deals and clients, meeting companies, and developing relationships, and they’re frequently on the road doing that.

They are responsible for winning most of the M&A, capital markets, and restructuring deals a bank executes – so, they are also responsible for most of its investment banking revenue.

Sometimes MDs get involved in deal marketing and negotiations, especially for high-profile clients that require special finesse, but they spend far less time on project management than VPs.

An MD’s average day is filled with tasks such as:

• Meeting with new companies that might become clients in the future, listening to their concerns, and answering their questions.
• Meeting with existing clients and subtly convincing them to do deals or updating them on overall market activity.
• Pitching companies and competing against other banks to win deals in “bake-offs” or “beauty pageants.”
• Meeting with private equity and venture capital firms to discuss their portfolio companies and which ones might need to sell, go public, or raise capital.
• Meeting with VPs and SVPs to discuss deals, potential deals, and internal matters such as recruiting.

Notice how 4 out of 5 of these bullets start with the word “meeting.”

That’s intentional because an MD’s life is a series of meetings.

It would be exceptionally rare for an MD to jump into Excel, Word, or PowerPoint to create documents, but they may make minor edits occasionally.

MDs still check and review deliverables, but only after the Associates and VPs have already done the initial checks.

As described in the article on the Vice President role, MDs have more autonomy than VPs and spend less time on execution, such as revisions of pitch books and CIMs.

At smaller banks, such as regional boutiques, MDs spend more time on traditional “sourcing” activities (conferences, cold emails, networking via referrals, etc.) because smaller banks always need new clients.

At larger banks, MDs spend more time servicing the bank’s existing clients, maintaining relationships, and casually pitching ideas to clients.

It’s hard to say whether the job is more or less difficult than a VP’s job, but it is a narrower one.

If you’re not great at multitasking, but you’re very good at doing one thing over and over again, you might do well as an MD – even if your VP job was a struggle.

On the other hand, if you think being a full-time networker and relationship manager is boring, then you should stay far away from this role.

Investment Banking MD Hours

On paper, Managing Directors have the best hours of any banker, with a likely range of 50-60 hours per week.

Just one small problem: those hours also include travel, and there’s a lot of it at this level.

The percentage depends on the bank size, the group (industry vs. product), and the office location, but it’s not unusual for bankers at this level to be on the road 50% of the time.

On the lower end, a product group MD that manages existing relationships and who is also in a big financial center might travel only 20-30% of the time.

But just like consultants, MDs also return home on weekends, so it’s plausible to have a family/social life at this level.

Why Would You Want to Become an MD?

Nearly all MDs are promoted internally, from the ranks of Senior Vice Presidents (SVPs) or Executive Directors (EDs) at the bank.

So, if you’re in a position to become an MD, you should already know that there is only one good reason to go for it: because you want to make a long-term career out of investment banking and stay in the role for at least 10 years.

In reality, most MDs do not even make it to the 2-year mark because of the enormous pressure to generate revenue, and only a small percentage of those who start as Analysts make it to the MD level (5-10%?).

So, you have to ask yourself if the potential payout – earning millions of dollars per year – is worth the pressure and the high chance of failure.

If you’re the rare person who gets hired as an MD as an outsider, then you need to figure out the nature of the role because these jobs may have somewhat different responsibilities (e.g., Rahm Emanuel’s stints in investment banking).

Investment Banking MD Salary (and Bonus)

Base salaries are in the mid-six-figure range, with total compensation in the high six figures to low seven figures.

An MD doing decently should earn at least $1 million per year, and sometimes a low multiple of that; the average range is probably $1 – $3 million.

A normal MD is unlikely to earn $10 or $20 million in a normal year; they would need to be even more senior (e.g., Group Head) for that to be plausible.

At the bulge-bracket banks, a significant percentage of an MD’s compensation is deferred or paid in stock.

That’s why it doesn’t make sense to stay in the role for only 1-2 years – you might lose out on the majority of your bonus(es).

And I’m guessing it’s also why Rahm Emanuel joined Centerview rather than Goldman Sachs…

A Day in the Life: What Does a Managing Director Do?

To illustrate this one, we’ll use the same day as in the Analyst, Associate, and VP articles, but change the perspective to the Managing Director instead:

8:00 AM – 9:00 AM: Do an internal conference call with MDs in other offices to review the group’s overall pipeline and some potential new deals.

In theory, everyone is supposed to weigh in and informally “approve” deals; in practice, fees trump everything.

You’re skeptical of one of the newer MDs who’s presenting high-fee-potential-but-also-highly-unlikely deals.

9:00 AM – 10:30 AM: You read a few emails from contacts at venture capital firms, and they’re suggesting that you meet with a few of their newer portfolio companies.

You read up on a recent industry conference, cross-reference it with their suggestions, and then have your assistant request meetings, following this soft introduction.

10:30 AM – 11:30 AM: You invite a promising VP to join you for a pitch about a bolt-on acquisition for a private equity firm’s portfolio company.

The PE firm is skeptical of this company’s merits, but you know they desperately need to turn this portfolio company’s fortunes around, so you persist.

11:30 AM – 2:00 PM: You head to lunch with the CEO of a client company that previously hired your bank to run acquisitions for it.

It’s supposed to be a short, 1-hour meeting with 30 minutes of transportation time, but this CEO keeps going on tangents and talking about his personal life, and you have to indulge him – at least if you want the potential for $20 million in fees in a few years.

2:00 PM – 3:30 PM: Back at the office, you conduct a series of calls with clients that are considering convertible bond issuances this year.

Low prevailing interest rates mean that investment-grade companies can issue zero-coupon bonds in many cases, which is quite appealing, so you make brief pitches and leave a few voicemails.

3:30 PM – 4:30 PM: The negotiations to finalize the Definitive Agreement in a fairly important M&A deal are about to fall through.

You have a relationship with the CEO of the buyer, so you call him and the CEO of the seller and try to get everyone on the same page.

The buyer wants a 3% termination fee, while the seller is willing to accept only a 2% fee, so this shouldn’t be that difficult… but you make little progress this time around.

4:30 PM – 5:30 PM: You conduct a job interview with an MD from another bank that your office is trying to poach.

He could boost the office’s fee revenue by at least 10%, but he’s also demanding significantly higher compensation than any of the current MDs, so it’s “wait and see” for now.

5:30 PM – 7:00 PM: You meet up with the staffer, a VP, and an Associate to discuss the office’s new hires this year.

Some have performed well in their first few months, but 1-2 of the Analysts and Associates seem unengaged and error-prone so far.

7:00 PM – 7:30 PM: The VP stays behind, and you vent to him over the CEO with all the personal issues from earlier in the day.

He’s clearly bored by these complaints, but you’re the senior banker who determines his bonus, so he has to stay and listen.

Then you strategize with him about a few other deals and head home.

—

This day may not seem “difficult,” and in some sense, it’s not: you didn’t have to perform open-heart surgery or rescue children from a burning building.

Butthe payoff from most of these tasks is unknown, and it often happens far into the future.

That said, you can’t just wait around for 5-10 years to get results with everything; you need evidence of potential fee revenue in the next 1-2 years if you want to stay employed.

How to Get Promoted to Managing Director at a Bank

As with VP-level promotions, technical skills do not matter at all.

What matters is your ability to get companies to sign on the line that is dotted.

If you’re bringing in deals and generating the required fee income as an ED or SVP, then you should have a good idea of whether or not you’ll be promoted.

The tricky part, though, is that the promotion process is not 100% based on your performance.

At most banks, existing MDs survey other senior bankers at the firm and ask everyone for their opinions of you.

Therefore, you need to make yourself “known” to people in positions of power elsewhere, and you need to avoid negative stories and hearsay at all costs.

Even if you perform well, you won’t get promoted if the most senior executives dislike your style, or if you caused some controversy (real or imagined) in previous years.

The Investment Banking Managing Director Job: Right for You?

As usual, this is the wrong question to ask because no one “chooses” to become an MD.

You start in IB, work your way up, and then stay in the field, switch firms, or switch industries.

It is impossible to know in advance how good you’ll be because the MD job does not use a common, everyday skill set.

So, my answer goes back to the point above: only take the job if you’re in it for the long-haul, ideally 10+ years.

It takes a long time to see a payoff from all the relationship building, office politicking, and deals that go nowhere – plus, you’ll give up significant deferred compensation if you leave early.

The biggest mistake we see is that students and career changers tend to think about the Managing Director job, and the investment banking career path in general, in terms of “hours and lifestyle.”

The thought process often goes like this:

“Well, I’ll have crazy hours in my 20’s, but if I can become an MD by my mid-30’s, it will be worth it since I’ll make over $1 million per year and will work only 50-60 hours per week. And then I can do it for a few years and retire when I’m 40.”

The problem here is that hours and lifestyle are useful metrics only for similar, entry-level jobs.

The nature of the investment banking Managing Director job and the sources of stress are so completely different that it’s ridiculous to view it through a $ per hour lens.

So, yes, you may be King.

And you won’t pull all-nighters at this level – but that doesn’t mean you’ll be able to sleep easily, either.

Uneasy lies the head that wears a crown.

Further Reading

Take a look at Is Finance a Good Career Path? or my review of the The Way of the Wall Street Warrior or Investment Banker Salary and Bonus Report.

GOLDMAN SACHS GROUP INC Executive Salaries & Other Compensation

The charts on this page feature a breakdown of the total annual pay for the top executives at GOLDMAN SACHS GROUP INC as reported in their proxy statements.

Total Cash Compensation information is comprised of yearly Base Pay and Bonuses. GOLDMAN SACHS GROUP INC income statements for executive base pay and bonus are filed yearly with the SEC in the edgar filing system. GOLDMAN SACHS GROUP INC annual reports of executive compensation and pay are most commonly found in the Def 14a documents.

Total Equity aggregates grant date fair value of stock and option awards and long term incentives granted during the fiscal year.

Other Compensation covers all compensation-like awards that don’t fit in any of these other standard categories. Numbers reported do not include change in pension value and non-qualified deferred compensation earnings.

This report is not for commercial use. Thorough reviews have been conducted to assure this data accurately reflects disclosures. However for a complete and definitive understanding of the pay practices of any company, users should refer directly to the actual, complete proxy statement.

Use of Data / Disclaimer

The information shown here is a reporting of information included in the company’s proxy statement. The proxy statement includes footnotes and explanations of this information plus other information that is pertinent in assessing the overall value and appropriateness of the compensation information. For those interested in conducting a detailed compensation analysis, we recommend that you review the entire proxy statement. You may retrieve the full proxy statement by going to the Securities and Exchange Commission (SEC) website at www.sec.gov and entering the company’s name and then looking in the first column for an entry of “Form DEF 14A” (or any similar code). You may also find the annual proxy statement by going directly to the company’s website.

What is a proxy statement?

A proxy statement (or “proxy”) is a form that every publicly traded U.S. company is required to file with the U.S. Securities & Exchange Commission (SEC) within 120 days after the end of its fiscal year. The proxy must be sent to every shareholder in advance of the company’s annual shareholders meeting. All proxy statements are public filings made available to the general public by the SEC.

The proxy statement’s main purpose is to alert shareholders to the annual meeting and provide them information about the issues that will be voted on during the annual meeting, including decisions such as electing directors, ratifying the selection of auditors, and other shareholder-related decisions, including shareholder-initiated initiatives. Also, proxies must disclose specific detailed information regarding the pay practices for certain executives.

Goldman Sachs restructured assets in Russia, top management became the buyer

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Goldman Sachs restructured its assets in Russia, top management became the buyer

The buyers could be Maxim Klimov, managing director of the Goldman Sachs European Special Situational Group, and Anton Schreider, managing director of Goldman Sachs in Russia

Goldman Sachs restructured its assets in Russia, writes RBC citing two sources in the investment market market. According to one of them, Maxim Klimov, managing director of the European special situational group Goldman Sachs, and Anton Schreider, managing director of the bank in Russia, became the buyers of the asset portfolio. The main assets of Goldman Sachs in Russia, RBC’s source named shares in HeadHunter Group, which owns the HeadHunter recruitment service, Cian, which owns the CIAN real estate database, and IXcellerate Limited, the parent structure of the data center operator of the same name in Russia.

According to the source, the deal took place last year. It could be “cash, but at a big discount.” According to the source, after the start of the CBO, Goldman Sachs wanted to exit Russian assets, “regardless of losses.” At the same time, the source of the publication noted that until February 2022, Goldman Sachs was a more active investor in the Russian market than Baring Vostok, one of the leading private investment companies operating in Russia and the CIS. Goldman Sachs invested its own funds rather than collecting various investors in funds.

Confirmation of changes in the structure of Russian assets of Goldman Sachs in RBC was also found in some public documents. Thus, in the materials of HeadHunter sent to the US Securities and Exchange Commission (SEC), it is indicated that a new structure has appeared among its shareholders – Broomfield International Limited. According to the website HeadHunter, by January 18, Broomfield owned 2.9% of HeadHunter, while Goldman Sachs’ share fell from 8.7% to 5.9%. Last December, Broomfield International Limited also became the owner of 9.4% of Cian shares. At the same time, Maxim Klimov and Anton Schrader registered a company in Dubai with the consonant name Broomfield Proprietary Investments in November 2022, RBC writes, citing data from the Dubai International Financial Center (DIFC).

Goldman Sachs announced back in March of last year that it plans to end operations in Russia. It became the first major American investment bank to make such a decision. At the same time, the bank reported that it was going to continue trading in debt obligations of companies associated with Russia. In early November, Goldman Sachs said it had cut its credit exposure in Russia by 9% in the third quarter.% to $205 million. The group noted in a statement that it allows for further strengthening of sanctions against Russia and “a possible material difference in actual impact from what is currently expected. ”

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Goldman Sachs replaced 600 traders with 200 programmers0054

The investment bank Goldman Sachs (in financial circles, this giant agglomerate is simply called the Firm, the Russian representative office is Goldman Sachs LLC) is engaged in investment banking, investment management, underwriting and a huge number of other services. It is difficult to find an area in which Firma does not have a share: it was engaged in the initial public offering of Rosneft shares, owns almost a million Tesla shares, and so on.

In the US, there are no profitable foreign currency deposits and high-yielding foreign currency government bonds, as we have, so the population usually tries to save money from inflation by buying securities. Alternatively, you can give money to the management of an investment or pension fund. Theoretically, professional management of financial assets allows you to quickly increase capital or save money, depending on what task is set for the manager. The only problem is that this “laying” between the investor and the financial market does not guarantee any profit, but it will never remain at a loss.

At its peak in the 2000s, the trading department at Goldman Sachs’ New York headquarters (pictured) housed 600 traders. Each served large clients. Today, their work is almost completely automated: there are only two securities traders left at work. All the work is done by algorithmic trading programs, which are serviced by 200 highly qualified programmers.

Marty Chavez, Deputy Chief Financial Officer and former Chief Information Officer of Goldman Sachs, spoke about the upgrade of the technical infrastructure. He spoke at the “Money, Data and Algorithms: Computational Economics” symposium on the future of applied computer science. The symposium was held at the Institute of Applied Computing Sciences at Harvard University in January 2017.

The financier admitted that traditional business models are becoming a thing of the past. “Everything we do is now supported by mathematics and software,” said Marty Chavez. He compared the modern financial empire Goldman Sachs to Google. They really do have a lot in common. For example, 33% of Goldman Sachs employees are software developers. The Firm employs 9,000 programmers. Another question is which company the most talented developer will decide to find a job in: Google or Goldman Sachs. Maybe, in a sense, they even compete in the labor market, because they hire the best.

The annual symposium on the application of computational methods to economics brought together hundreds of programmers, scientists and businessmen from the United States. This year there were interesting reports, including on the use of blockchain in the financial industry: how Bitcoin and the block chain work, and why the transition to this system is a “return to the roots”, to the original decentralized idea of ​​​​money as they were conceived. from the beginning, when there were no banks. In ancient times, not a single merchant could imagine that a third party could intervene in a transaction, somehow “freeze” money and interfere. But this is exactly what is happening now with conventional non-cash payments – intermediaries in the face of banks can freeze the account or cancel the transaction.

Blockchain technology can be very useful in the financial industry, says speaker Aviv Zohar from the Hebrew University of Jerusalem. He said that there is a huge amount of innovation happening with altcoins right now, some crazy and amazing ideas are being born and tested there. For the needs of the banking industry, experts are developing more advanced protocols for working with the blockchain, which are devoid of some of the disadvantages of bitcoin and altcoins. For example, the SPECTRE protocol described in the 2016 paper by Lewenberg and Sompolinsky.

The financial industry is eyeing interesting concepts from the world of cryptocurrencies such as zero-knowledge proofs, smart contracts, etc.

Aviv Zohar warned only that when used in the financial field, programs should be carefully checked and tested. He recalled the history of software in the decentralized autonomous organization The DAO. A few weeks after the launch of The DAO, hackers found a simple bug that allows you to transfer funds without resetting your account – and withdrew tens of millions of dollars from the Etherium system.

A bug in the DAO software

For this reason, Goldman Sachs and other investment banks invite only the best programmers. If traders’ mistakes can lead to small financial losses, then a mistake in a trading computer program can cause much more damage.

Other investment firms are following Goldman Sachs’ lead by adopting algorithmic trading and replacing traders with programmers. According to Coalition statistics, now almost 45% of trading takes place electronically, without the direct participation of people.

In addition to increasing efficiency, this allows companies to get rid of unnecessary high-paid personnel, because in the largest investment banks, traders earn an average of $42,000 per month in salaries and bonuses. Obviously, this money is taken from the profits of investors, including from the money of ordinary people who invest their earned dollars in investment funds in order to save savings for old age. And at Goldman Sachs, traders’ salaries were even higher.

Computer programs are designed in such a way as to repeat the logic and strategies of effective human traders as much as possible, only these actions are performed an order of magnitude faster. And the program won’t take millions of dollars in commissions.

Goldman Sachs is currently automating other elements of its operations. For example, there are already 146 specific steps that need to be taken to go public with a company, and many are just “begging to be automated,” said Marty Chavez of the Firm.

By the way, Goldman Sachs recently opened a new service for ordinary people: a fully automatic consumer lending platform Marcus. Interestingly, this platform was raised like a startup by one of the groups that Goldman Sachs sheltered at its headquarters in New York.