Shearman & Sterling to even out partner pay-scale
Shearman & Sterling has announced is set to reduce pay for equity partners and high earners, and increase pay for lower-ranking business generators. This evening out of the pay ratio is seen as going against industry-wide trends to increase pay at the top of the spectrum to attract star partners.
Under the old pay model, the bonus pool (comprising 15 per cent of the firm’s profits) was distributed in two ways: half was distributed on merit and half was distributed at the discretion of the compensation committee for non-performance-related reasons. Under the new model, the pool will being used almost exclusively to reward individual performance, business generation, teamwork, or the performance of the partner’s practice area.
The move is seen by many as a way of easing the unrest in the partnership regarding the widening pay gap between top and low-tier partners. This pay grap increased substantially under the leadership of Rohan Weerasinghe between 2008 and 2011, when junior partners had their pay cut by hundreds of thousands of dollars in order to boost the compensation of more senior partners.