“Some of Wall Street’s Masters of the Universe, buffeted by the stock market’s declines, have lost a lucrative pay perk,” writes Charles Gasparino in today’s Wall Street Journal.

“Credit Suisse First Boston capped a strategic push to cut expenses by, in recent days, tearing up the guaranteed-pay contracts and other deals of around 350 top investments bankers and traders, which the big securities firm hopes could save a total of about $400 million over the next three years. These contracts, which became popular in the 1990s bull market, guaranteed the pay of traders and bankers even if business dropped; many of the guarantees were valued at more than $1 million a year.”

“Among those at CSFB whose contracts were renegotiated: Frank Quattrone, a highflying investment banker who in the late 1990s received annual pay packages approaching $100 million, according to people familiar with the firm. As part of a new deal, Mr. Quattrone, who heads the technology investment-banking group for the big securities unit of Zurich’s Credit Suisse Group, gave up a guarantee that he and his team would receive a chunk of the group’s annual profits, according to people with knowledge of the plan.”

“Beginning next year, Mr. Quattrone’s pay will be set by the firm’s top management, including CSFB Chief Executive Officer John Mack, along with investment-banking chiefs Charles Ward and Tony James. Even with the changes, some of the executives affected still will receive annual paychecks of $1 million or more. The new pay package, scheduled to be announced Tuesday, will be based on the firm’s overall profits, these people say, rather than just the Quattrone team’s own investment-banking business.”

“At the same time, CSFB has reached an agreement in principle to redraw the guaranteed contract of Jack DiMaio, chief of the firm’s North American bond business, which was valued at more than $45 million over three years, according to a person familiar with the matter. This negotiation was part of broader pay contracts being arranged for Mr. DiMaio’s entire team of around 300 executives, which had been guaranteed a total of more than $300 million over three years. Under the new pact, Mr. DiMaio’s team has agreed to give back to the firm a big portion of their guaranteed-pay package this year and next, people close to the firm say. Mr. DiMaio couldn’t be reached to comment Monday.”

“People at CSFB say the guaranteed-pay contracts, which forced key executives to work independently to generate as much profit for themselves and not necessarily the firm, prevented CSFB from developing a common culture. Tearing up such contracts is important to ‘create a strong one-firm culture, which is essential to leveraging our many strengths, meeting the challenges we face and achieving our full potential,’ Mr. Mack said in an internal memorandum. A spokeswoman for Mr. Quattrone declined to comment.”

“The move by CSFB suggests that other major Wall Street firms could face pressure to scale back such perks, which have increasingly been used as a recruiting tool. In recent years, CSFB has been a leader in such practices; indeed, CSFB extended a guarantee to Mr. Quattrone to lure him from the securities unit of Deutsche Bank AG in 1998. Historically, however, such guarantees have ended badly for securities firms because the executives get to keep the cash even if the profits end up less bountiful than expected.”

” ‘The system has been exploded now that the leader in such deals is out of the business,’ says Michael Holland of Holland & Co., a Wall Street money-management concern.”