Wall St.'s guaranteed profit-buster; More locked-in pay reduces firms' options as revenues slip.

Publication: Crain's New York Business

Publication Date: 29-JAN-01

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COPYRIGHT 2001 Crain Communications, Inc.

In November, when UBS Warburg recruited Kenneth Moelis, one of Wall Street's most successful bankers, the firm was quick to trumpet the move as a coup. Now, it's looking more like a potential millstone.

The problem is that to lure Mr. Moelis away from Credit Suisse First Boston, the huge Swiss bank not only had to dig deep-offering Mr. Moelis $17 million a year-it also had to promise to do that for three years running.

On Wall Street, where most employees traditionally receive up to 80% of their annual compensation in volatile year-end bonuses, many investment bankers are learning a new and reassuring word: ``guaranteed.''

To lure new staffers and retain valuable veterans, an unprecedented number of securities firms last year locked in pay and bonuses for up to three years,...

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