Bonuses Can Be Tricky

On Wall Street, things can always be tricky, especially when it comes to compensation. One thing to keep in mind is your year-end bonus may not be paid out in cash, but instead in some kind of “deferred compensation” scheme, such as shares in the company’s stock. Hedge funds, in particular, are fond of such antics and often force their employees to invest their theoretical bonuses in the firm’s funds. This way, that money is tied up for years and sometimes may not even be vested* for many years. So as you read an offer letter, watch out for terms of bonus payments. If nothing is mentioned, you can assume the bonuses will be paid out in cash, although you should probably double-check with your recruiter contact.

*Vesting means the money actually belongs to you.

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