On-Target Earnings¶
Definition¶
On-target earnings (OTE) is the total expected annual cash compensation when a professional meets their performance targets — typically the sum of base salary and expected bonus. OTE excludes long-term incentives like carried interest or equity.
Context¶
In Ep. 3, Matt Rooney uses OTE (described as "all-in cash") as the standard framework for discussing BD compensation ranges: junior (2–5 years) $150K–$200K, mid-level (8–12 years) $300K–$450K, senior (15+ years) $500K–$750K. These figures represent base salary plus expected bonus, separate from any carry allocation.
Dan Herr notes that OTE can be misleading because firms structure the base-bonus split differently. Some firms offer a lower base with uncapped upside ("you could earn $800,000 per year"), while others offer a higher base with limited bonus potential. Dan argues for a roughly 50/50 base-bonus split as the right starting point — matching deal-team norms — with the philosophy of keeping people "hungry, not starving."
Related Terms¶
- BD Team Structure and Compensation — OTE as the standard comp metric
- Carried Interest — long-term incentive excluded from OTE