hi all, in offer letters I have usually seen the compensations described as: base salary + bonus (discretionary or formula based against pnl performance). I have received an offer where the base is not really a base and it is described as: "your annual draw (against your annual discretionary bonus) will be XX paid in monthly instalments. Does that mean that if the discretionary bonus was <= to the draw, the difference would have to be paid back?How dodgy is this on a scale of 1 to 10 according to your experiences?many thanks

Verify whether this is the case with the prospective firm, check with a lawyer. I doubt that it is the case that you would have to give the money back, there are issues of minimum wage and probably other labour law components that I am not aware of - bit it would be a stupid and desperate thing for them to do.

Is this a prop shop? If so, just be careful as you may actually end up with nothing. Yes, continue to ask them for clarification before signing anything. Many prop shops end up charging their employees for using their services and its best to avoid such places.

QuoteOriginally posted by: Galerkinhi all, in offer letters I have usually seen the compensations described as: base salary + bonus (discretionary or formula based against pnl performance). I have received an offer where the base is not really a base and it is described as: "your annual draw (against your annual discretionary bonus) will be XX paid in monthly instalments. Does that mean that if the discretionary bonus was <= to the draw, the difference would have to be paid back?How dodgy is this on a scale of 1 to 10 according to your experiences?many thanks1) Yes, this is dodgy2) Please, please tell me this is not a big bank

QuoteOriginally posted by: Galerkinhi all, in offer letters I have usually seen the compensations described as: base salary + bonus (discretionary or formula based against pnl performance). I have received an offer where the base is not really a base and it is described as: "your annual draw (against your annual discretionary bonus) will be XX paid in monthly instalments. Does that mean that if the discretionary bonus was <= to the draw, the difference would have to be paid back?How dodgy is this on a scale of 1 to 10 according to your experiences?many thanksavoid, avoid, unless it is your only job in this market. i knew a regional bank that offered base salary based on "cost to the company" to make the numbers look great, mostly to junior employees. shocked employees after joining found out that the effective base was usually 30% or less. all kinds of charges ranging from electricity, PC, quotes etc were included in the "cost to the company", including the option of getting 0.5% lower interest on a $1mn home loan from another of their group company, where or not one actually took that loan. that bank used to have a very high turnover after the first year in good years, but in bad years many young people stuck around. this scam went on for quite a long time. that bank ended up with a uncanny number of young people, particularly ugly looking women, at very senior levels, those that couldn't find jobs elsewhere.

thanks for the comments. I was surprised too as it is from a well known medium-large hedge fund for a position of systematic trader. I am surprised I am the first one seeing this on here. If they do it I must believe other wall street/City of London places do it too, maybe it is a way of treating rather large base salaries(?!)... It is not my only offer but the specs of this role and package are exciting. There are shadows in there that I am trying to clarify/negotiate, this one of the base that becomes a draw in particular was justified as a way to run expenses on their side... Anyone with experience of places substituting the "base salary" with "draw against bonus" please say hello.