Energy traders are getting bonus guarantees 10-15% higher than last year from large firms seeking to boost staff in the once-again lucrative sector, traders and recruiters say. Big players are promising compensation of over $1 million including salary and bonus, up from the $800,000 traders averaged last year, and multimillion-dollar guarantees are being promised to the top traders. Bonuses are likely to go up even higher this year as competition for star traders intensifies and banks fight to keep talent from jumping ship.
“Much of the staffing up at bulge-bracket firms transpired in 2004 and 2005, but second-tier banks are rapidly hiring personnel to catch up to the Goldman Sachs and Credit Suisses of the world,” says Eric Moskowitz, director with the Options Group, a global executive search and consultancy firm.
Goldman, Credit Suisse, Merrill Lynch and Morgan Stanley were the first to invest in energy trading after the Enron debacle died down several years ago. Among those hiring now are Deutsche Bank Securities, JPMorgan Securities and Bear Stearns, which last month began recruiting personnel for a 26-trader energy desk.
Foreign banks, such as Fortis, Calyon and Dresdner Kleinwort Wasserstein, also want to establish businesses in the U.S. Spokespeople for the banks either declined to comment or did not return calls. A JPMorgan spokesman said the bank is strategically expanding its energy desk in the U.S. and globally.
These firms will face tough choices on whether to pay up for headcount or stand fast and potentially miss the market. “To build a meaningful desk, a brokerage would need to commit at least $30-50 million just for hires,” said Alan Johnson, ceo of Johnson Associates, a compensation consultancy.
All of them are competing against established firms, whose top traders can earn as much as $25 million a year, so luring top professionals is difficult.