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Evercore's poor results look bad for its bonuses

Evercore, one of the largest independent investment banks in the world, reported a 30% drop in revenues for the third quarter.

Although the numbers on a nine month basis aren’t as bad, with a 12% drop compared to the first nine months of 2021, they’re still lower than some of their boutique competitors such as PJT.

The firm has broadly maintained asset management and commissions related revenue both on a quarterly and YTD basis. Advisory (down 31%) and underwriting (down 47%) are the main causes of the revenue decline.

Bonuses will almost certainly be impacted. Compensation expenses fell 27% year-on-year in the third quarter and are down 9% year to date. The firm said this “principally reflects a lower accrual for incentive compensation,” which was “partially offset by higher base salaries,” among others.

Evercore employed 2,160 people globally at the end of Q3, an increase of 25 people on the end of Q2. Average pay per head was $165k for the past quarter, suggesting annualized average compensation of $725k (compared to $800k at PJT, and $884k for Evercore at this point last year). Evercore cut 6% of its staff at the end of 2020 and said "individuals who were not performing up to our expectations" were let go. There's little sign of anything similar in 2022, so far. 

Evercore’s Q3 conference call confirmed that bonuses would be tied to “what fourth quarter revenue looks like”. CFO Celeste Mellet said that although the firm admitted that it was a “a difficult environment”, they were conscious of sensitivity in economic forecasts.

CEO John Weinberg said that the firm is “responsible” and “very careful and thoughtful” over headcount. However, Weinberg added that “this is a good time to be investing,” said Evercore is “very much still in the market for high, high grade extraordinary talent.”

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AUTHORZeno Toulon
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