Year’s Highest Paid MBA: $675K To Start

by John A. Byrne on

An MBA in this year’s graduating class at Stanford Graduate School of Business landed a hedge fund job in the Northeast that paid the freshly minted MBA a guaranteed bonus of half a million dollars, bringing the person’s total starting compensation package to at least $675,000.

The guaranteed bonus alone–which is four times the median starting salary of $125,000 for Stanford’s Class of 2011–will likely make this unidentified graduate the highest paid MBA of the year. Last year, the highest paid MBA was a graduate of the Wharton School who pulled down a base salary of $350,000 with a private equity firm in New York. (see “When The Sky Is Nearly the Limit: Highest Paid MBAs of 2010“).

In common with most other business schools, Stanford reports the range of high and low salaries, signing bonuses, and other guarantee bonuses separately. So it’s not possible to determine the total compensation of this one graduate. “Federal privacy laws prevent me from disclosing any information on this specific student,” said Pulin Sanghvi, assistant dean and director of the Career Management Center at Stanford Graduate School of Business.

Still, the half dozen Stanford MBAs who took jobs with hedge funds reported median starting salaries of $150,000, with a high of $200,000 and a low of $110,000, and median signing bonuses of $25,000, with a high of $150,000 and a low of $20,000. If the MBA simply hit the medians, the graduate’s total package would come to a whopping $675,000. And none of these figures include such perks as tuition reimbursement, relocation expenses, the value of stock or stock options, auto allowances, profit sharing or 401K plan matches.

Interestingly enough, the $500,000 guaranteed bonus matches the record set by a graduate in Stanford’s Class of 2005 who went into manufacturing and reported a guaranteed year-end bonus of half a million dollars.

The very highest paid MBAs tend to be special cases. To these first MBA jobs, they bring extraordinary work experience and track records that convince firms who want to hire the absolute best and brightest that they are worth the money. In private equity that means hiring grads who already have been in the business–often as high-performing analysts for the same companies that hire them back.

STANFORD MBA IS STILL SHORT OF THE RECORD SET IN 2004 AT WHARTON

As shockingly high as the $675,000 sum is, it’s not the highest ever. The University of Pennsylvania’s Wharton School of Business reported that one of its MBAs landed a private equity job with a $680,000 total compensation package back in 2004. And another Stanford student in the Class of 2011 gained a higher starting salary of $300,000 in, of all fields, general management. The $300,000 windfall was the highest reported base salary at Stanford this year.

Most of the top business schools have yet to release their full 2011 employment reports, but are expected to do so over the next few weeks. So it’s possible that yet another school’s graduate could top the estimated $675,000 comp package at Stanford, but it’s highly unlikely given what other schools have already reported as well as historical trend lines. This data is reported to the schools by its graduates.

HIGHEST BASE SALARY AT CHICAGO BOOTH THIS YEAR: $300,000

A University of Chicago Booth School of Business grad also reported a $300,000 base salary this year, the highest at the school. That person, according to the school’s just released employment report, found a job in private equity. At Columbia Business School, an MBA who took a job at a hedge fund doing buy-side/sell-side research started at a $300,000 base salary. The highest guaranteed bonus also went to a student, possibly the same graduate, and was $275,000. At Duke University’s Fuqua School of Business, the MBA reporting the highest base salary–$250,000–took a job in investment banking in the Northeast. That sum was 150% above Duke’s $100,000 median for i-banking jobs.

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  • http://www.gurome.com Arpita Sen

    I am not questioning whether the applicant deserved the kind of package that is quoted here. However, these kind of salaries are worrisome especially in an economy that is gasping for breath.

  • gregorylent

    a culture out of balance … the job adds nothing to the world

  • eric458

    They probably worked him to the bone lol

  • MBA Aspirant 2012

    Nice picture for the article , lol !

  • Furious Styles

    Completely disagree with the previous posts (except the picture comment lol). People who get these type of salaries have ample experience to back it up. I heard of people who have reached Vice President level at top PE / HF firms (usually early 30′s) and decide to go get their MBA. Thus, when they leave they can manage to get jobs at higher comp than the average candidate.

  • guest

    I agree, FuriousStyles — many of these folks already had accomplished track-records to back up these offers (and saw b-school as a way to take a 2-year “break” rather than a catapult)….

    …This article is a bit naive about the PE/Hedge Fund industries:

    “Even so, median pay in private equity isn’t nearly as large as these big numbers”

    Uh….but *after bonus* it frequently is. It’s not uncommon AT ALL for top grads from HSW in PE, etc., to pull down a $150k base BUT THEN around $300k+ as a bonus…even in a rough year — and of course the sky’s the limit in a very good year (It’s a bit surprising that someone writing for a b-school blog doesn’t know that?)

    And BTW, yeah that’s a lot of money, but I wonder how much shorter their life-spans are when they’re tethered to their blackberries literally 24/7/365 :)

  • Anonymous

    lol @ Arpita – why is it worrisome? The guys going into PE/HF have better skills than an average person. They’ve worked hard in middle school, allowing them to enter a top high school. They worked hard in high school, allowing them to enter a top college. Then they worked hard in college, allowing them to get a coveted job. Then they worked hard in their job and got into business school. I’m personally sick of people who gets paid lower and complain that it’s not fair. If you also pulled countless allnighters starting from middle school, then maybe you’re justified.

  • Jane

    He’s been an analyst at the firm for 3 years before MBA.
    He is just returning.

  • Furious Styles

    Is ridiculous to believe that people that get these salaries don’t deserve it. Even a first year associate (a relatively easier job to get and less sought after than buy-side opportunities) in a bulge bracket investment banking (advisory side, not sure about S&T) can get pretty good salary (100K base for first six months, 40K signing and 50K stub bonus, base gets bumped to 125k starting in January and first year bonus are around 160k – 200k). Thus, these salaries for top performers / lots of experience that get the most sought after jobs for MBAs, makes perfect sense.

  • StateSchoolMBA

    Love it. I’m making the same average salary as a Harvard, Wharton, or Stanford MBA and I paid only 1/3 of the cost. I do have a good work-life balance. Love it!!!

  • Turd Ferguson

    StateSchoolMBA: Be that as it may, you ultimately have your MBA from a state school.

  • Cara

    ?…is this an undergraduate forum? If so, I agree with TF. :)

    If not, I still agree with TF…use the 2 year MBA as a way to convince the true alums that you are really one of them. Get some ivy blood in you at all costs…even if it means going to Yale SOM. :)

  • AmericaFailing

    KPMG has done numerous studies showing that Investment Banks overall destroy value, and Hedge Funds and Private Equity Firms consistently under-perform the overall market. So, in essence, America pays massive salaries to its best and brightest to work their asses off destroying the country. We are really stupid.

  • LongTerm

    Remember, these are STARTING jobs. Many of these IB’s will be making $5 million annually in 7-10 years. Not that many opportunities for state school grads :(

  • Jukka Paulin

    Come on, let’s be honest. Everyone loves money. And we’ve had economic shifts up and down before, hundreds of times. I don’t like to add anything except the point that perhaps we can’t evaluate the situation objectively, because of the overwhelming amount of focus given to the economics of certain ex leading countries.

  • TheBornLeader

    That kind of article really makes a disservice for those schools because it conveys the impression that MBAs would receive or at least negotiate very high salaries after completion of their degrees. This is really misleading for prospective applicants and will bring only frustation. We don’t know the personal situation of those students but I wouldn’t be surprised to learn that:
    - some of them were joining family owned businesses and had a better treatment than normal candidates (+500K$ salaries);
    - some of them were experienced professionals who were already doing very well prior to their MBA (+250K$ salaries, typically the case for a 7-10 years of experience VP in investment banking who has been accepted as a Director for an Hedge Fund after his Wharton MBA).

    Don’t forget also that those salaries are self-reported.

    Many people would apply for an MBA solely for financial returns and I think this is a poor reason to pursue an MBA. They want to get in Finance, Private Equity, Hedge Funds and have no idea about the job or the lifestyle. They just want to make more money.

    50 years ago, Business Schools were recruiting Top Managers to transform them into Leaders: people able to create value, to create jobs in our capitalist countries and to develop innovation. Today it’s not rare to hear admission committees say that:
    - they want younger people in their classes (I still have to meet young candidates who can make constant valuable contributions to case based classes I took)
    - their graduates will succeed in finding good work/life balance over the time and many of them will work as self-employee after few years (BS lost their mission of creating leaders, they just create happy people who think only about themselves and have no goals for the society).

    PQ, you are interviewing the deans of the biggest BS in the world. Please remind them that they are playing an important role in global economy since they feed the Corporate World globally. They should help in creating effective leaders with a vision for the society and not for their bank account, people who are goal driven and who want to improve the world and not just retire early with a good pay cheque.

  • perspective

    Hope to put things in perspective. i’m a MBA alumni from one of these so-called top schools. These super-high paid grads are very rare. Many have been affected by the financial crisis. Many are also starting their own businesses. Not all are chasing for top $. Over time, I believe, what they end up doing a few years down the road is really what they are passionate about or interested in…the pursuit fo top $ while nice wears off…before they even attain good $…there are also many companies out there that may not put much value on top MBAs

  • NYCTrading123

    I don’t think this is 100% true, at least not in the sense that it’s laid out. You don’t just jump into getting a half a million dollar a year job like that (of course it already says he had prior work experience), and I think this further skews the myth that graduates who work on Wall Street make tons of money – not the case (depending on what you consider tons of money). Not to say this couldn’t be true, but I find it very hard to believe this happens even 1-2% of the time. I know, personally, that hedge funds offer good compensation, but half a million dollars junior-level is unheard of. The golden years of trading prior to 2008 or so are over. Everybody made money back then, now everybody is scrambling for the same buck. Most hedge funds haven’t done very well in the past few years, even many of the pioneer funds on the down-n-dirty quant side (DE Shaw, GETCO). Not to say people don’t make money anymore, but it’s a hell of a lot harder and there are people who are absolutely brilliant who just do so-so. The bottom line is, I think the best “educated” compensation you’re going to get is from being an attorney/doctor. Who cares about 120-200k base when you can become a dentist and make much more and answer to no one when you have your own practice. Your job has better security and a greater need (unless you have some magical trading ideas that spew money). I think the real upside is in small business now. I, for one, don’t care about climbing up a corporate ladder.

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