Investment banking salaries have always been a hot topic in the finance industry. With the average base salary for first-year analysts starting at around $85,000 plus bonus, investment banking is known to be one of the highest paying entry-level jobs. However, there are variations across different sectors and firms. One area that offers lucrative compensation packages is defense investment banking. As governments continue to prioritize national security and military capabilities, defense companies require investment banking expertise to raise capital and advise on mergers and acquisitions. This leads to high demand and compensation for bankers specializing in aerospace, defense and government services. In this article, we will take a closer look at investment banking salaries specifically at defense contractors and advisory firms.
Base salaries and bonuses at top defense investment banks are generous
Many of the top defense companies like Lockheed Martin and Northrop Grumman have in-house investment banking divisions to provide financial services. Investment bankers at these groups can expect base salaries starting at $100,000 for analysts and exceeding $150,000 for senior bankers. Bonuses are also healthy, ranging from 20% to 100% of base salaries depending on firm and performance. For example, a top performer at Northrop Grumman earned over $500,000 in 2020 including salary and bonus. At advisory firms focused on aerospace and defense like Houlihan Lokey’s Aerospace, Defense & Government group, base salaries also start at $100,000 for junior bankers. More experienced vice presidents and directors take home $150,000 to $250,000 in base compensation, with bonuses doubling total pay.
Prestigious defense contractors pay top dollar for top talent
In addition to strong compensation, investment bankers at elite defense companies also benefit from the prestigious brand name. Working at Lockheed Martin, Raytheon Technologies, or other leading contractors signals subject matter expertise in aerospace, defense and government services. This differentiated experience allows bankers to command higher salaries later in their careers relative to generalist investment bankers at banks like J.P. Morgan or Goldman Sachs. The most talented bankers are regularly poached for senior roles across the defense industry. For example, a number of high-ranking executives at Lockheed Martin began their careers at Houlihan Lokey’s Aerospace, Defense & Government group. The lucrative career trajectory keeps compensation high for defense investment bankers as they progress.
Strong deal flow supports ongoing salary growth
One factor contributing to the high salaries at defense investment banks is the strong deal flow. Government spending on weapons systems, military technology, and national security continues to rise year after year. In the U.S. alone, the defense budget exceeded $730 billion in fiscal year 2019. Major initiatives like missile defense systems and next generation fighter jets provide steady business for defense investment bankers. The Russia-Ukraine conflict has further highlighted the need to modernize and expand military capabilities, supporting deal volume going forward. With limited talent specialized in aerospace, defense and government services relative to the high volume of mission-critical transactions, compensation will remain attractive for the top defense investment bankers to incentivize deal execution.
In summary, defense investment banking salaries are generous, with top performers earning over $500,000 in total compensation. Prestigious defense contractors pay top dollar to attract and retain talent supporting mission-critical defense initiatives and technology M&A transactions.