Bonus season is shaping up to be a real Battle Royale. Yes ladies and gents, it’s truly survival of the fittest out there.

First, the big trends:

• Yes, it is true! MBA-level junior bankers may make as much or more than MDs. How? See below…
• Analyst pay is expected to increase overall.
• Benchmarks for what’s considered top performing have increased.
• The bonus range is broadening as money is being diverted from poor performers to reward top performers.
• Compensation as a % of revenue is steady for most banks. JPMorgan is increasing its share of comp from 38% to 43% (FinancialNews), but Merrill (49%), Lehman (49%) and Bear are staying relatively flat year over year. Goldman (47%) is dropping 3% vs. last year.
  
• Slash and burn! Banks are preparing for an ugly 2007 (FinancialNews)
  

The most important news: FinancialNews reports that junior bankers will likely see higher comp levels. They’re projecting:

• Analysts: $105,000 - $145,000.
  
• Associates: $200,000 - $400,000, (top performing 3rd years will see up to $450,000)
• VPs & Directors: $300,000 - $700,000
  

Bankers whose comp is tied to fees are being held to a higher standard. “Average” performance is about $50MM in fees at places like Lehman, Credit Suisse, Merrill and Morgan (FinancialNews). It seems the ratio of fees to comp is a bit better at boutique banks like Evercore and Greenhill, where $10- $15MM in fees equals around $6MM in comp, says FN.

You think those bigger bonuses come from the sky? Well, they don’t. They’re coming directly out of the pockets of those of you who are reading this site, in other words, the unproductive ones. But we’re here to help you become better bankers so instead of closing this window, repeat after me: “I Vow to Become the Best I-Banker I Can Be!” and read on…

The bonus “message” from several news outlets seemed to be cohesive today: bigger bonuses for top performers, the axe or zero bonuses (!!!) for the chaff.

How do you know if you’re wheat? One tactic that banks are using to retain top talent is to provide guaranteed bonuses and multi-year contracts, reports the NY Post. Yes, we have entered a world where bankers are like sports stars. But there’s more. And I’ll just quote it all because this is too good:

“Banking execs are also worried about losing talented junior-level employees, especially associates who might defect to rival firms or quit the Street altogether for jobs that offer a better lifestyle.

That’s why ’star’ associates, those bankers just out of business school, in some cases will be paid even more than vice presidents.”

And as to be expected in a system where bonuses are being more tightly tied to performance is that there is more variance in payout, according to FinancialNews. So if you find yourself with a subpar bonus, you’re being pushed out.

Related bonus stories:
London vs. New York: will the real BSD please stand up? (Independent)
Wall St money hits the streets … literally (NY Daily News)
Is your bonus low, median or high? (NYPost)