Citadel deferred compensation plan is dumb!
I just turned down a Citadel offer because of the deferred compensation plan. You don't make your promised comp until year four with the company, and as you get raises, you get more money withheld. The first year take home difference between someone making 400k TC and 550k TC is only ~15k after taxes! If you quit, you forfeit all unvested amounts, but if you fired, you get it back? What kind of backwards idea is this? When it comes time to move on from a company, the most viable exit strategy should not be to seek termination.
It's for tax savings yo
According to this, it should still be yours even if you quit? https://www.teamblind.com/post/Citadel-deferred-comp-policy-4frp05hW
Maybe for past hires. It is explicitly written in my offer that it is forfeit.
😱
This is standard practice at banks and probably most buy side firms. It disincentivizes people from leaving. Typically if you go to a competitor they will buy out your unvested bonus
This creates limited exit strategies for people in the tech industry. I doubt the FAANGMULAWTFBBQ companies are going to buy out some mid six figure unvested bonus for a l5 engineer.
People need to be honest around here; the current standard agreement has 18 month non compete - nobody is going to easily hire somebody, (i) wait 18 months and (ii) buy out your deferred comp (you'll mostly join a competitor) and (iii) give you a guarantee for the joining year (which will be September of the following year)
After 2-3 years , the amount you defer will be less than the returns on multiple years of last deferrals and it’ll even out. Also your math is predicated on no raise…be better LOL. It’s a double edged sword but as 2s says above, competitors will buy out your unvested $
At 15% interest, it takes 8 years for me to break even compared to the withheld amount being deposited in a checkings account with 0% interest. I thought I did something wrong but I confirmed my numbers with multiple people including a physics Ph.D With a raise, your withholding % goes up and you leave even more money on the table. I'm not comfortable going into a place expecting to stay eight years for the full benefits.
Ok, doctor scientist bro PhD MD Best of luck with your job decisions, feel like citadel will live without you.
Not sure about Citadel (CitSec has a different one now) but the old one you only forfeit your unvested units if you violate the non-compete. Are you sure you read things correctly? Even in CitSec's new plan, you never forfeit your initial grant, you only forfeit any gains if you quit.
He asked someone with a physics PhD ok, he’s sure lmao
I have confirmed this multiple times with my recruiter and given them multiple examples confirming how the situation pays out. If I leave, I forfeit everything, not just the gains but also the initial grant. If I get fired before the service date, that years tranche still gets paid out to me. Imagine the most viable exit strategy to cause an outage.
You're smarter than I was - performers have no leverage; non compete + deferred bonus is a dog collar for changing jobs. They bring in younger people at above market compensation and gradually turn the tap off
I guess I made the right decision because I had no insight in what the raises and comp growth looked like. The recruiter couldn't give me numbers on the raise % that high, medium, and low performers get. All she said is that "citadel takes care of you" lmao. If she said something like high performers get 15% bonus raises or something like that, at least I could bet on myself to get large raises that'll make up for what was withheld in previous years.
Even receiving only half your bonus can still be massively more cash than most other tech, while still having a similar deferred schedule to vesting RSUs. Also what about garden leave? Is it not that common to have citadel pay out your non-compete to keep you from a competitor? I’ve heard lots of stories about that but maybe it’s rare
I don't want to undersell it, few people make very good money via raises - but a lot of good people get locked in this vice. It's a weird compensation structure that penalizes job change more than it incentivizes performance
What if you just no show in the office and specifically ask for fire? Will that even work in order to get deferred bonus after exit
This is an educational post. Unfortunately this is a common practice within the industry. What varies from firm to firm are the amount withhelda and the payout period. There are posts on walltreetoasis about this. There are also other items that make the tech vs finance comparison rather complex.
This is a great post. I went thru something similar and agree with everything you said here. In fact, i was planning to make a post like this of my own. Also please dont forget that bonus is paid out in february, so if you stay one year your tc(600k) is not a yearly tc(because bonus is over 14 months). The longer you stay the less that last 2 months has an impact but for people who are rightfully scared of committing 4+ years, it’s still important.
Elaborate more please?
Some percentage 0-35% of your TC is withheld from your bonus and vests over three years. If you make 1m TC and assume you have no raises, your year 1 tc is 650k (cause 35% is withheld). Assuming that withheld amount is growing around 12% interest, year 2 is 780, year 3 is 922. year 4 is 1085 I wouldnt have a problem with this but you dont get your withheld amount if you quit, meaning if you quit at year 2, you made some 1430 total comp over 2 years instead of 2m