Shrinking Bonuses Leave European Energy Traders Disappointed

  • Median bonus for gas, coal, power traders was 33,815 pounds
  • Median bonus was 36 percent of base salary, survey shows

Even after gas had its worst year since 2009 and coal slumped the most since 2007, European energy traders were disappointed by their bonuses for last year.

Additional compensation last year was on average 42 percent lower than expected, according to a survey of 650 coal, gas and power traders polled by Commodity Appointments Group, a recruiter based in Petersfield, England. The median was 33,815 pounds ($51,446), with gas traders getting the most and coal traders the least, the data showed.

Chart showing median bonus and salary by asset class.
Chart showing median bonus and salary by asset class.

Banks from Morgan Stanley to Bank of America Corp. have shut energy-trading desks in Europe amid increasing regulation and slumping prices, which have dropped further this year. That’s meant fewer roles with the potential for the biggest payouts, according to Shaun Smart, principal associate at Commodity Appointments.

“There are still a few traders who received disproportionately large bonuses but perhaps just a smaller group of them than there were historically,” Smart said by e-mail. “The nature of trading has changed, with fewer pure proprietary seats in the market, which traditionally earned larger bonuses.”

How bonuses are calculated accounts for much of the difference between expectations and reality, according to Smart. They are increasingly paid on a discretionary basis whereas previously they were indexed to performance, giving traders a less accurate idea of payouts. Utilities offer better job security and lower compensation than trading houses, he said.

“Positions in companies which offer a bonus contractually linked to performance are usually the most sought” after, Smart said. “These are few and far between but most often are with trading houses.”

Median Bonus

The median bonus was 36 percent of base salary while the mean was 136 percent, skewed by a few million-pound bonuses, according to data from the survey, due to be published next week. The median total compensation for all traders was 127,490 pounds, and was 114,367 pounds for power, 137,109 pounds for gas and 160,850 pounds for coal.

The average total pay, salary and bonus combined, was as much as 140,000 pounds higher than the median boosted by the most highly paid traders, the data show.

Coal traders got 20 percent of their total compensation in the form of bonuses, compared with 28 percent in power and 31 percent in gas. Of the trader, originator, marketer and sales roles surveyed, 98 percent were based in Europe.

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