Former Kidder Peabody reps who stayed on with PaineWebber after the 1994 buyout are now free to roam about the country. In January, their four-year forgivable loans expired, removing one golden handcuff that may have kept some at the firm.
PaineWebber dished out upfront bonuses to Kidder Peabody brokers at the end of 1994, shortly after its acquisition of the firm. On a sliding scale, Kidder reps producing $500,000 or more received a 25% bonus, while reps generating $200,000 or less received 20%, all in the form of prorated notes, fully forgivable after four years.
Brokers contacted at various PaineWebber offices say the expiration of that deal hasn't driven reps to the exits en masse and is unlikely to do so.
"We've had [former Kidder reps] leave this office periodically over the last few years, even before the note was up," says one former Kidder rep in a large PaineWebber office in the Midwest. "Only a small number of people perhaps were waiting for this deal to expire. I can't think of any here who have left [because of it]."
A former Kidder broker in the Rocky Mountain region says that certain PaineWebber branches may be more affected than others, but he hasn't seen any movement in his office.
"Maybe psychologically, once the note's done, brokers feel they've fulfilled their obligation," the rep says. "I wouldn't be surprised."
Niels Leppert, a brokerage headhunter with The Primary Group in Longwood, Fla., says brokers have more important considerations than just the forgivable loans influencing their decisions to leave.
"The forgivable notes expiring, as a general rule, have very little impact," Leppert says. "If a broker is in a situation where the chemistry or support structure is wrong, they are free to walk to the manager with their checkbook at any time."
Leppert, who does some recruiting for PaineWebber, as well as other large firms, says the PaineWebber/Kidder marriage generally has been viewed as a success by brokers.
The Rocky Mountain rep agrees. "When PaineWebber bought Kidder, it was a two-edge sword. It went from a smaller company where things were a little more personal to something more structured and rigid. ... But PaineWebber has really slick computer systems compared to what Kidder had. And PaineWebber has the money to pump into things."
Even with recruitment deals abounding, brokers don't want to leave their firms unless they have to. "Who wants the hassle of moving?" asks a PaineWebber broker in Missouri. "It's not worth it. You start losing credibility with clients and find out the grass isn't always greener on the other side."