Code Updates: Specialist Roles

Following requests some additional specialist roles have been added:

• Legal Counsel

• Partner (Business Consultancy - Australia)

• UK Director / Associate (Division / Region) Real Estate

Please note we have plans to add a number of new specialist roles in early 2024. If you have any requests please contact us.

Code Updates: Asia Fund Sizes

Following requests, we have now added guidance on sizes of funds and private equity firms in terms of indicating what constitutes a small, medium and large fund in terms of assets under management.

This change should give you more confidence in selecting the correct fund size.

Code Updates: Board and Specialist Role Modifiers

We have made live a significant update to Board roles and specialist roles tools by adding in modifiers.

Previously when searching for board / specialist role remuneration you will have seen a range showing a calibrated minimum, average and maximum.

Whilst this range is helpful, users have requested more guidance and tools to enable them to decide which figure within the range they should use, especially when they are aware that their prospect is either a high flyer or working in a company that is not performing well.

To support a more accurate estimation, modifiers have been introduced that enables you to tailor inputs and derive a bespoke result. Guidance via tool tips have been added to the modifiers to provide support, noting that modifiers enable you to use your own judgement and additional research to tailor the results.

I will demonstrate these new additions in the November user group quickly as well. But if when exploring this new feature you need additional support, please ask during the user group, drop us an email or book in a 121 with me!

Code Updates: New Videos Added to the Academy

We have just released 2 new videos to the academy to support your learning.

The fist video, Dividends, is focused on understanding who receives dividends, how much and the different types of dividends. Whilst some dividends might be a minor part of a director or minority shareholders income, for business owners and partners, dividends will often be the primary source of income, especially given the tax advantages.

The second video is focused on gaining a basic understanding of Accounting and Legal partners. We explore an individual’s route to become a partner and their remuneration.

Look out next month for further additions to the academy library and some more advanced and practical application videos in 2024!

Code Updates: India Specialist Roles

Following requests from a number of Code users, we have now made the India Specialist roles live.

The roles available replicate the roles for other countries, but if any additional roles are required please let us know.

Thanks

Jon

Code Updates: Career Earnings Savings Vehicle

Following feedback from users, we have now created a new savings vehicle option when using Career earnings / Profile mode.

For those individuals who have a net worth over 1m, it is likely they will invest in a diversified portfolio as opposed to holding all of their wealth in one asset class (such as cash)

Following research we have established a typical asset allocation for wealthy individuals and created a proprietary returns profile that better reflects the returns that an indivdual with a diversfied portfolio receives. We have called this “Balanced Portfolio”

Our revised guidance is that for those with over 1m net assets you should choose this savings vehicle as opposed to the current default of low risk (Savings account).

Any questions please ask!

Jon

Code Updates: Company Secretary

Often when looking on companies house or in the accounts you will see someone or an organisation listed as company secretary. Understanding what this role helps give you an insight into the structure of a business.

 Starting for small companies, an accountant or business startup specialist often support a business to navigate the legal requirements of setting up a new business. This could include registering with the applicable authorities (such as companies house), producing the requirements company articles or other such administrative jobs. The company secretary will also often produce the financial accounts and be responsible for overseeing the submission of other important documents such as confirmation statements. As such for small companies you will often see an accountant listed as the company secretary. They will not have any influence on the strategic direction of the company or take a salary / profit share and will be remunerated based on the services they provide. For smaller companies this fee is likely to be in the range of £800-£2000 per year.  On code though we have set this as 0 income and instead of searching for a prospect who working in the legal / accounting profession who is listed as a company secretary (often for multiple businesses) you are advised to use the specialist roles salary data to evaluate them as opposed to board roles.

The role of a company secretary in larger companies though is more prominent. As per the CGI the company secretary has a crucial role within an organisation:

The company secretary is a strategic position of considerable influence at the heart of governance operations within an organisation. Governance describes the way that an organisation is directed and controlled, which includes a company's strategy and decision making, how it achieves its aims, and ensuring that all activities undertaken comply with legal, ethical and regulatory requirements. Company secretaries have a broad skill set – corporate law, finance, governance, strategy and corporate secretarial practice – and they advise a company's board in these key areas, providing support to the Chair, CEO and non-executive directors.

By becoming a company secretary they will have:

·         access to a wide variety of different job roles across many sectors

·         a diversity of responsibilities

·         a fast-track to high-level roles, working with the board

·         the potential to earn six figure salaries

·         the opportunity to work overseas.

https://www.cgi.org.uk/professional-development/careers/being-a-company-secretary

On code we now have added company secretary salary data for medium / large companies and this is found under board roles / company secretary available for the UK, US and AUS.

Hope this blog is useful and provides some additional insight.

Code Updates: Asia Data

Hi All

Just a quick note that over the next 2 weeks we will be releasing the Asia remuneration (Specialist roles and Board roles) data. This is for China, Hong Kong, India, Japan, Malaysia and Singapore.

Data will be loaded into Code every 2 - 3 days so please keep checking to see what new data has been added (there are already some Accountancy, Banking and Legal roles loaded up today!).

I will write a post towards the end of next week outlining all the additional roles that we have added and will be happy to get your views on any further roles that would support your use of Code.

Thanks

Jon

Code User Group - March 2023

The rearranged March Code user group was held on 12 April and focused on Carried Interest and LTIPs.

For those who could not attend, I thought providing a brief recap and a copy of the slides would be useful. We do not record the sessions to ensure everyone feels comfortable asking questions and sharing their thoughts / prospect insights.

Along with the summary / slides, there are also sections in Knowledge Base on Carried Interest (within the Private Equity Fund Video) and LTIPs (within the Director Remuneration video) to further support your understanding.

Private Equity: Carried Interest

Alongside their basic pay and annual bonus, General Partners within a Private Equity firm receive their main remuneration through carried interest. This is mainly distributed upon the closure of the fund (typically 7 years).

Carried interest is essentially the Private Equity fund’s share of the accumulated profits. Upon the closure of the fund, monies are paid out in the following order

1. Return of the limited partners (investors) original money

2. Hurdle rate profits (ie typically an equivalent of 8% returns annually)

3. Any remaining funds are split 20% (performance fees) to the private equity firm and 80% to the limited partners.

4. The general partner typically will take around 85% of the performance fees which is their carried interest. The remaining 15% is shared between other staff.

Carried interest is typically whole fund, but can be deal by deal.

LTIPs

Long-term incentive plans are paid to executives and aim to remunerate executives in a way that aligns their interest with that of shareholders and provides an incentive for good performance.

LTIPS can take the form of:

1. Options

2. Performance shares

3. Restricted stock

4. Stock appreciation rights

LTIPS even once vested, often need to be held for a number of years so will not normally be liquidated for some time (normally 5 years). Some forecasting of their award can be done given the often transparent criteria that executives must meet in order to receive them.

Hope this summary helps and any questions let us know.

Thanks

Jon

To access the slides please navigate to: https://drive.google.com/file/d/1i6q49tMC7FUg5BkXcx12WJ1ukibHX5Hq/view?usp=sharing

Code Updates: Knowledge Base Now Live

Hi

In a first for the sector, we have now launched Knowledge base (c).

Knowledge base provides a series of videos to support your understanding and knowledge development of all things prospect research / fundraising.

Our first set of videos cover understanding the financial world, director remuneration, understanding company accounts and an introduction to stock markets. Each topic is broken down into sub-sections to help easy navigation.

Please keep checking back as more videos are in the process of being uploaded and will cover a wide array of topics and how Code can be used to support research. The Hedge funds, Private Equity and Company Valuation videos will be available soon, followed by other topics / more advanced insights.

Please let us know your thoughts on this new resource and any topics you would like to see appear in the future.

Thanks

Jon

Code User Group: February Summary

Following the latest user group meeting, I thought I would write up a quick summary of the key points we covered across the three sessions (UK, US and AUS). Any follow-up questions let us know.

Background

We first outlined the three main types of remuneration, namely:

·      base pay (paid monthly after tax)

·      short term bonuses (typically split 50/50 between cash and shares)

·      long-term rewards (i.e. LTIPS, carried interest, etc).

Dividends (on shares that executives have been previously awarded) and perks are other types of remuneration senior executives receive.

Take home

A quick method for high earners - you can usually take 50-55% of their pay as what they take home after tax, for example.

Base salary USD1,000,000

Short term bonus USD1,000,000 (50% cash and 50% shares)

Total cash income USD1,500,000

Tax rate 50%

Take home pay (annual) USD750,000

Who decides pay levels?

In public companies, these rewards are decided by the remuneration committee. 

In private companies it is the directors/owners who set their/the pay. 

Short term bonus targets

Whilst base pay is fixed, the level of short and long term bonuses / rewards are based on meeting certain targets.

These targets include:

·      financial (net income, EPS, EBITDA, market share)

·      non-financials (ESG, strategic)

·      discretionary.

When are bonuses paid

These bonuses are therefore paid once the full year annual financial results have been published. So bonuses are often paid a month or two after year end. This is the case for traders and non-executives.

How liquid are bonuses?

In our view we see:

·      base pay ‘allocated” for usual household bills, events etc

·      bonuses – extra money that is more freely available for one-off purchases and donations. As a result in the Code Career Earnings tool we apply a much higher rate of savings applied to bonuses.

Choosing the level of bonuses

On Code, we provide a range of base pay and bonus data. Where it is a big company, based in a financial centre (i.e., London) or if the company has seen strong revenue / profit growth then you should move up from the CAV towards the higher figures stated on Code.

Whilst public company remuneration is often easily available, Code really supports you in accessing data on private companies and typical remuneration.

Short-term bonus focus

As a rough guide short-term bonuses are split 50/50 between cash and shares.

Bonuses are only paid out in some roles such as

·      executives (cash and shares)

·      senior managers (cash and shares)

·      rainmakers (i.e. those who bring money into the business through sales and fees) (cash)

·      fund / hedge fund managers (based on performance) (cash)

·      private equity managers (based on fund performance) (cash)

·      Investment bankers (cash)

Some senior roles such as Chairman, non-executive directors and even some board members, will not get a bonus.

In some industries individuals not in management positions will get bonuses such as traders, which can be considerable. Therefore look for those who bring in money or have significant responsibility!

Short-term bonuses – shares

Where shares are awarded, these shares are usually vested straight away (i.e. become under the individuals ownership) but cannot be sold for a period of time (i.e. 3-5 years).

Directors are also reluctant to sell the shares in most circumstances as this would send a negative signal to the public.

Shares under their ownership will receive dividends the same as any other shareholder.

The share award will typically be taxed as income at their marginal tax rate. This creates a tax liability for the director who might use some of their bonus to pay the tax liability.

Also note, there are share incentive schemes for staff within the business that are taxed favourably but there are usually limits on these, such as 30k per year.

We will explore long term bonuses in another session, and how they are taxed.

Sector drivers

Finally, the nature of short-term bonuses differs for those in specialist roles such as finance.

Hedge fund managers for instance don’t get long-term incentives but instead will receive an annual bonus in cash based on the performance of the fund.

Private equity will get an annual bonus, but their big pay day will come when the fund closes, typically after 7 years and is called ‘carried interest’ (on Code this is in the LTR result and reflects the typical amount of carried interest at the end of the 7-year period).

Leavers

Good leavers will retain all accrued share awards and will often receive a pro-rata amount of their annual bonus. No further long-term awards will be given.

Bad leavers will retain all accrued share awards and will not receive a short-term bonus. No further long-term awards will be given.

Hopefully the above is a useful insight / summary of what we discussed and any further questions please come back to me!

Jon 

Code Updates: Sector map

Hi All

A small update has been made to the sector map following a request.

The NAICS sectors have been added to the Guides / Sector map to enable you to map the NAICS sector to the Pyro sector.

Please keep checking back to the Code update section over the next week or so as there are quite a lot of updates coming through over the next week.

Thanks

Jon

Code Updates: Investment Banking Roles

Last week during the Code user group we had a deep dive on investment banking (who they are, the different roles and remuneration). 

Following discussions it was requested that specialist roles reflected the different areas of investment banking, especially as there are differences in the remuneration across the 5 main investment activities (M&A, Underwriting, Sales & Trading, Asset management and Research).

This data is now live and reflected in specialist roles for AUS, UK and the US. 

Furthermore the base pay and bonuses have been updated to reflect the current (2023) bonus season. 

Additional specialist roles are close to being added and I will let you know when these go live.

Thanks

Jon 

Code User group - January 2023

Dear All

It was great to see so many attend the first UK Code user group of 2023.

We covered Investment banking roles, career progression and remuneration in detail along with venturing into some of the other specialist financial roles such as traders etc.

We also discussed some of the key bonus times and the recent job cuts being undertaken by investment banks. 

Don't forget an investment banker at a bulge bracket is different (in terms of remuneration) to an investment banker at a investment banking division of a commercial bank. As promised here are the list of the bulge bracket investment banks

• Bank of America Merrill Lynch

• Barclays - as discussed in the session this has extensive commercial and retail exposures (unlike some of the other bulge bracket banks) and is the commercial / retail bank in the UK that pays the highest bonuses for investment banking staff. GS and JPM are the biggest overall bonus papers though!

• Citi

• Credit Suisse

• Deutsche Bank

• Goldman Sachs

• J.P. Morgan

• Morgan Stanley

• UBS

Note other banks such as HSBC also have investment banking divisions, called global banking and markets, but are not a bulge bracket

Here is the Reuters article I referenced as well which is worth a quick read

https://www.reuters.com/business/finance/banker-bonuses-go-boom-bust-jarring-reversal-2022-12-22/

Please look out for the additional data requests that you made during the session going live. These are being worked on at the moment and will be available at the same time as the revised investment banking bonus data.

Thanks again for all the questions and I look forward to our next session in February!

Best wishes

Jon

Updates: Investment returns and tax rates

Hi

As we have now moved into a new year, the annual investment returns and tax rates have been updated throughout Code. These changes will mainly impact the results in the Career Earnings tool.

It has been quite a year in financial markets and we have seen returns turn negative for a number of asset classes, whilst global interest rates (good for savings) have increased.

Watch out for a short blog next week that will outline some of the key movements in markets and rates and implications for fundraising.

Thanks

Jon

Ps lots more updates on their way in the next few weeks!

Updates: US SIC Codes

Hi All

Following requests, we have now added US SIC codes to our Sector map tool.

If you know the US SIC code of a company, but are unsure which Pyro Sector this maps to, please navigate to: Guides / Sector Map / SIC Code (US) and choose from the dropdown which US SIC code is applicable.

The results box will then show you which Pyro Sector to choose when using tools such as Smart Valuation or Board roles etc.

Hope this update helps!

Thanks

Jon

Updates: AUS Ask Planner

Hi All

In what is likely the last major update of 2022 (don’t worry lots of exciting stuff is on the way for 2023), the Ask Planner for Australia is now fully operational.

The Ask Planner tool enables you to understand whether a particular month is a good time to ask or not based on typical cash flows a business or individual.

For the AUS Ask Planner we have the key tax dates, key tax payment dates and even typical holidays periods all mapped out for you.

After running the results dont forget to click on monthly insight and then on each month to see the key events!

The Ask Planner for UK and US is also available.

Any questions or observations let me know!

Jon

Updates: Asia Valuation Data

Morning (well in the UK it is morning) All

We have now launched our Asia valuation functionality to the live site.

This enables you to value companies in the following additional countries using our Smart Valuation Tool:

1. China

2. Japan

3. India

4. Malaysia

5. Hong Kong

6. Singapore

You can now also utilise the Predictor for these countries.

We will be adding data for these new countries to our remuneration tools (Ie Specialist Roles, Dividend and Director Remuneration) over the next few months and I’ll let you know when this data set is ready.

Furthermore adding valuation datasets for South Korea and Canada are in the works with a target launch date of the year end.

We also have a number of additional new tools and data sets in the pipeline set to go live over the next few weeks, so please keep an eye out for developments. These include:

1. Profile mode

2. The launch of knowledge base

3. Additional Specialist roles for AUS, UK and US.

Thanks and any questions let me know.

Jon

Updates: Specialist Roles

Hi All

A small, but an important update has this morning taken place to the Specialist Roles tool.

Following user feedback, the years in role input has now been moved to Level of Experience.

Some users suggested that finding the exact years in role was tricky on occasions and the 0+ years were a little confusing where time in role had no impact upon the individual’s remuneration.

We have now addressed this enabling you to select more subjectively the level of experience of an individual within that role. The new categories are:

1. Starter

2. Established

3. Advanced

These levels of experience relate to the experience within the role and to add further guidance we have added the typical number of years that individuals would be classed as having accrued that level of experience.

Please note we are currently working on adding additional specialist roles across all countries and hoping to have these ready by the end of the month.

We hope this update helps and watch out for further exciting updates coming later today!

Thanks

Jon

Updates: AUS Specialist Legal Roles

Today we have updated the roles and salary of all Australian legal roles. This provides an up to date view on remuneration and especially the enhanced pay levels of partners.

Thanks Jon

Ps Thanks Stephen Rowe for you help in putting this together!