(July 25 – 17:00 ET) – The importance of broker retention is rearing its head in a couple of recent brokerage takeovers in the U.S.
The Wall Street Letter is reporting that brokers in the retail division of SG Cowen Securities, which was acquired last week by Lehman Brothers, are threatening to refuse to consider Lehman’s retention package until Cowen resolves a dispute with them about the retention deal they received from Societe Generale in 1998. The brokers reportedly want faster access to a payout scheduled for July 2001, based on their production in the last six months with Cowen Freehling and first six months at SG Cowen.
The deal isn’t helped by the fact that the SG Cowen brokers face a grid at Lehman in the 30% to 40% range, down from the 40% to 50% range to which they are accustomed.
SG Cowen refused to comment on the report, except to say that the deal is proceeding. Lehman also declined comment.
SG Cowen brokers are reportedly being offered 40% of 12 months trailing commissions to stay on at Lehman. Over at PaineWebber, the U.S. brokerage acquired last week by UBS AG, top producers are being offered 35% of trailing commissions in stock, plus 2,000 options, according to Registered Rep Magazine. Brokers in the middle tier will get 25% of their trailing 12 months and 500 options. Bottom-rung reps will get 10% of their production in stock.
-IE Staff