What’s the upperlimit on MBA pay, the biggest number an MBA from a top business school couldcommand in today’s marketplace?
The high end forbase salary alone can be nearly three times the median at some schools, accordingto a new analysis of employment reports from the top business schools. But ifyou take into account sign-on bonuses and other year-end guaranteedcompensation, the highest total compensation packages can easily reach half amillion dollars.
For the Class of 2014, the highest pay appears to have gone to a Wharton MBA who received$350,000 in “other guaranteed compensation”–a number that exceeded everyreported base salary for the year. If the graduate also bagged the mediansalary and signing bonus for the class, the MBA would have signed up forfirst-year total pay of $500,000. In all probability, the big prize went to oneof five Wharton MBAs who gained jobs in the hedge fund field where themedian–yes median–other guaranteed compensation was $150,000 in 2014, greaterthan the median base salary for the entire class of $125,000.
MBAS AT THREE SCHOOLS–STANFORD, HARVARD &WHARTON–HAD GRADS LANDING $300K SALARIES
The highestreported base salaries for 2014, meantime, were $300,000. At least twograduating MBAs from Stanford University’s Graduate School of Business landed$300K starting paychecks, one in private equity and venture capital and theother in investment banking in Asia. At least one Wharton MBA also reported a$300K base, while at least a pair of Harvard Business School grads landedsalaries in private equity and venture capital at the $300,000 mark. AtStanford, there were plenty of other big pay days for Stanford this past year:A pair of MBAs each landed $240,000 in “other compensation” in hedge fund andmedia/entertainment jobs, while yet another Stanford grad expected to pocket$200,000 in other year-end comp in investment management.
And the lowest salaries?Graduating MBAs at three prominent business schools–Columbia, Michigan, andCarnegie Mellon–all reported students accepting jobs for just $24,000 a year tostart. Two of them were predictably in the non-profit arena, while a third wasin consulting, probably in either India or Africa where the currencytranslation into U.S. dollars makes the compensation seem puny by comparison.Indeed, the lowest reported salary of all was $23,000 for a financial servicesjob in an emerging economy in Asia for an MBA from the University of NorthCarolina’s Kenan-Flagler Business School. More often than not, the lowestsalaries were paid to MBAs who went into the social sector or government work.But in some cases the lowest sums were reported by grads who went into retail,media and entertainment, healthcare and technology.
The highs andlows, of course, are all extremes. Typically, MBAs who nail down the biggestpay packages of their class have highly desired skills, proven work experience,and successful pre-MBA track records that make a company pay up big time. “Onthe high salaries, it’s usually a very unique and specific match between acompany’s needs and a student’s relevant skills and experiences,” says SheryleDirks, associate dean for career management at Duke University’s Fuqua Schoolof Business.
BRINGING A ‘LOT TO THE TABLE ON YOUR STARTDATE’
A good exampleoccurred at Northwestern University’s Kellogg School of Management last year.One MBA grad had worked for Starwood Hotels & Resorts where she helpedto build a successful customer reward program. The graduate was able to takethat experience, along with her newly minted MBA, to a well-known fashion brandwhere she will build a similar program. “She has leverage and they don’t havethe skills or experience to do what she can do,” says Mark Gasche, managingdirector of Kellogg’s Career Management Center. “She can bring a lot more tothe table on her start date. That’s the kind of person who would get high pay.They bring a deeper, often specialized background to leverage in anegotiation.” Her job offer fell outside the reportingthree-month-post-graduation reporting period so her compensation wasn’tincluded in Kellogg’s overall numbers.
It’s no accidentthat one of the two highest paid MBAs at MIT Sloan last year, both landing$180,000-a-year salaries, had more than five years of work experience. Theother had three to five years of work history. “Students who command highsalaries can show deep functional experience,” says Regina Resnick, associatedean and managing director of Columbia Business School’s Career ManagementCenter. “You might already be a proven and successor investor, gone through ourvalue investing program, and then be attractive to a hedge fund. Whatever thecase, MBAs are well compensated and they are incredibly privileged. The degreereally pays off.”
At Columbia lastyear, the top end was achieved by someone who didn’t even enterfinance, the industry that typically pays the highest first-year compensationand a strength at Columbia. something of a shock. The highest reported basesalary–$275,000–was scored by an MBA who took a business development job at amanufacturing company.
Many schoolsconceal the highest total compensation packages to protect the privacy of theirgraduates and to prevent applicants from having unrealistic expectations ofwhat they can expect out of the MBA degree. So in virtually all cases, thenumbers provided here are conservative. It is not known, therefore, if theMBA at Columbia Business School who landed a $275,000 starting salary alsoreceived a sign-on bonus as well as other year-end compensation. For thatmatter, it also does not include reimbursement of tuition, relocation offsets,carry, or non-guaranteed performance bonuses or the value of stock options.
WHO GETS THE BENNIES DEPENDS ON WHICHINDUSTRY EMPLOYS YOU
Generally, only aminority of students receive these other benefits. Carnegie Mellon’s TepperSchool said, for example, that slightly over 22% of its graduates last yearwere given stock options. Wharton revealed that half of its MBAs receivedrelocation money in 2014, but only 5% accepted jobs with reimbursed tuition.Sign-on bonuses obviously are more common than “other guaranteed compensation.”At Wharton, 65% pulled down signing bonuses, but only 15% got a back-endcompensation deal. It generally depends on the industry in which an MBA acceptsa job.
If the big winnerat Columbia merely received the median in “other compensation,” as 75% of thestudents in the MBA’s industry category did, it would have pushed thegraduate’s starting comp package up by $50,000 to $325,000, though the highest“other compensation” in that job category pulled down an extra $150,000, threetimes the median.
Columbia, by theway, had at least have a dozen graduates last year with starting base salariesof $200,000 or more, including a $270,000 base for an MBA who went intoinvestment management, a $200,000 base for a graduate who entered the privateequity field, and another $200,000 base for an MBA who landed a position in theentertainment industry. All those numbers are a far cry from the lowestreported salary—just $24,000 for a person who accepted a job in the education,government or non-profit sector.
HARVARD DECLINES TO REVEAL HIGHEST AND LOWESTSALARIES OF THE YEAR
Unlike mostbusiness schools, Harvard Business School won’t even reveal the high and lownumbers for its graduates, preferring to provide only 25th percentile and 75thpercentile numbers. For the Class of 2014, both private equity and venturecapital industries posted $175,000 base salaries at the 75th percentile. Soclearly, there were HBS graduates who easily won $200,000 starting pay. The“median” guaranteed other compensation for the 13% of the class that went intoprivate equity and leveraged buyouts was a whopping $80,000. Throw in themedian sign-on bonus of $25,000 and you’re looking at first-year total paypackages for some that easily topped $300,000. The lowest base among the 25thpercentile numbers at Harvard this year is not so low at all: $90,000, for wentto work for a non-profit organization.
At Kellogg, thehighest paid MBA of 2014—earning a $240,000 base salary—went into a surprisingjob in consumer products with a food and beverage company. Another luckyKellogg grad, landing a $225,000 base, took a position in investmentmanagement. Another surprise: The highest paid sign-on bonus of $65,000 waspaid to an MBA who went to a tech firm involved in Internet service ore-commerce.
MBAS CLAIM THAT THE COMPENSATION IS PRETTYMUCH THE LAST REASON THEY ACCEPTED A JOB
How important arethe big numbers? If you believe surveys that track MBA opinions about why theyaccept a job, it has little to do with compensation. When MIT Sloan asked itsClass of 2014 graduates the reason they accepted an offer, the vastmajority–32.5%–said it was for the growth potential. Some 16.1% mentioned “jobfunction,” 15.4% industry, 12.8% job content, 7.9% people or company culture,5.2% prestige of employer, and 5.2% the location of the job. Only 3.6% of thegraduates said they accepted a job because of the pay dangled before them.
One interestingtidbit to take away from the highest numbers is that most of them occur at themost highly ranked business schools. Those whopping pay days outside the normare far less likely at lower ranked MBA programs. Indeed, the highest paidgrads at Carnegie Mellon, Vanderbilt and Washington University all hit thestandard base pay offer from a top consulting firm: $135,000.
Notes: Jackpot refers to graduatesreceiving the median of all three forms of compensation: salary, signing bonus,and other year-end guaranteed bonus. Not all graduates are given all three. AtStanford, for example, sign-on bonuses this year were collected by half theclass, while 38% of the MBAs received other year-end guaranteed compensation.An asterisk indicates average numbers rather than medians. An asteriskindicates a mean, rather than median, number.
Differences in payoften reflect industry choices and geography. Stanford’s higher median base canlargely be attributed to the fact that 12% of this year’s class went intoprivate equity, which currently pays the most lucrative comp packages to MBAs.The median PE starting base salary this year was $170,000. At Tuck, forexample, only 4% of this year’s class went into private equity and the base forthose PE jobs was just $120,000.
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