Pay Increases for US Financial Jobs

Pay is on the rise, especially for junior and midlevel investors and dealmakers. Investment banks had to quickly bolster their ranks after the stock market crash of 2000 and a subsequent period of layoffs. As deal volume picked up over the last two years, banks had to lure back junior people who also were courting offers from hedge funds and private equity firms. That forced investment banks to offer junior and midlevel employees bigger bonuses, Matus says.

Hedge funds and private equity firms have an urgent need for more talent. Blackstone and others are raising giant funds as large as $20 billion, enabling them to do more deals and larger transactions. "With more money and more deals comes the need for more people, and there's a shortage of top talent at most levels," says Korb. For example, dealmakers two years out of their MBA program can earn $400,000-plus a year in base salary and bonus, plus a share of company profits that can be worth much more, according to Glocap and Thomson Financial's 2007 Private Equity Compensation Report. "Two or three years ago, it was closer to $300,000 to $325,000," Korb says.

Senior private equity players earn more. A vice-president three to five years out of business school can earn $400,000 to $650,000-plus in base and bonus, along with a multimillion-dollar share of profits. A partner can earn several million in base and bonus, plus millions more in profit sharing. The numbers tend to be larger at big firms.

It may seem pointless to keep score at that level, but hedge fund stars probably earn the most money of all. At 15 Central Park West, a new luxury condominium in New York City, the penthouse went to Daniel Loeb, the 44-year-old shareholder activist and CEO of $3.5 billion-plus hedge fund Third Point Management. He reportedly paid a city record of $45 million for the full-floor apartment. His neighbors at the new building include actor Denzel Washington, musician Sting, and Goldman Sachs' Blankfein, who reportedly paid $27 million for his apartment. That makes Loeb the king of the hill.