New York firm Cravath Swaine & Moore announced its associate bonuses last night (11 December), with its associates pocketing between $30,000 and $60,000 (£15,160-£30,321) ahead of Christmas.
This is the second year in a row that the firm has kept its associate bonuses static. It has offered an associate bonus ranging between $30,000 and $60,000 since December 2004.
Under the rewards system, all first-year associates at Cravath will take home an extra $30,000, with the bonus increasing by $5,000 for every year’s experience. But seven year-qualified associates will take no more home than six year-qualifieds, who are now $60,000 better off. The bonus is not related to hours billed or merit.
This means that first-year associates at Cravath will take home a total of $175,000 (£88,440), given that their base salary is $145,000 (£73,280). In February, Sullivan & Cromwell sparked an associate salary war by raising its newly-qualified rate by $20,000 to $145,000, which most New York firms matched.
There was speculation that because most firms had increased their base salaries that bonuses would be a fraction of what was offered last Christmas.
But Cravath has had a particularly strong year. At the beginning of 2006, it announced that its net profit had risen by 30 per cent over the previous 12 months due to the M&A boom, with Cravath’s average PEP increasing by 20 per cent to $2.6m (£1.3m).
That trend shows no signs of abating. In the last month, the firm advised Brazilian steel company CSN on its £4.9bn counter-bid for Corus and is defending the London Stock Exchange with Freshfields Bruckhaus Deringer from Nasdaq’s £2.7bn bid.
Cravath follows Milbank Tweed Hadley & McCloy in rewarding its associates, which announced yesterday that it too would be keeping the bonus it offered to its associates in December 2005, between $30,000 and $65,000. That also represents the third year in a row that associates at Milbank have received the same bonus package.