New York's boutique investment banks — Evercore, Moelis & Co, PJT Partners, and Lazard — are paying at least 60 per cent of net revenues to staff for the fourth consecutive year, far above the threshold executives once called temporary. Lazard's compensation ratio hit 69.9 per cent in the first quarter, and Evercore's CFO Tim La Londe told investors in March the firm remains "still a way from sub-60 per cent." The hangover stems from a post-pandemic hiring spree when boutiques snapped up senior bankers shed by bulge-bracket rivals, offering two-year guaranteed payouts plus 25-30 per cent of deal revenues.

Revenue growth has been real but uneven. PJT's advisory fees jumped more than 80 per cent from 2022 to 2025, Evercore's rose 36 per cent, and Moelis's total revenue climbed nearly 60 per cent. Yet the boutiques kept hiring: Lazard added 28 senior bankers last year against a 10-15 target, then abandoned any target date for hitting the 60 per cent ratio. Shares have underperformed both the S&P 500 and larger peers, which benefit from trading revenue.

Mid-market dealmaking — the boutiques' bread and butter — has stalled on high financing costs, a frozen private-equity exit market, and geopolitical uncertainty. Executives are turning to AI to shrink junior teams; Lazard's Peter Orszag wants to cut the "total associate equivalent per managing director ratio," though Moelis and Evercore CEOs see no near-term staffing reductions. JPMorgan's Jamie Dimon warns AI yields only temporary margin. Perella Weinberg recently cut 10 per cent of its workforce, a signal that prolonged drought could force rainmaker culls.

The market is pricing a structural shift: a higher permanent share of revenue diverted to banker pay rather than shareholder returns. Until mid-market volumes recover, the 60 per cent benchmark looks aspirational, not operational.