New Smith Barney Payout Package?

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Sep 19, 2007 3:58 pm

Comments anyone?

Sep 19, 2007 4:29 pm

Can someone explain what it is? I know some AG fc’s went there already, maybe too soon?

Sep 19, 2007 4:32 pm

Reps doing over $300K will go from 42% to 48% effective next month (one part of it).

Sallie K. said she intends to make the comp package very competitive.

There will probably be more on this matter sometime this week so stay tuned.

Sep 19, 2007 6:50 pm

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window.errstatus = 3; setMessFormPrm("none"); setEmptyMessage(); function highLightItems() { var i = 0; return i; } ( DJ ) 09/19 11:34AM =DJ Smith Barney To Increase Brokers' Pay By Evelyn Juan Of DOW JONES NEWSWIRES

Smith Barney is boosting the pay of the majority of its financial advisors.
The move more than reverses a compensation cutback in December that hit the
Citigroup Inc. (

<SPAN =HIGHLIGHTCOLOR1 id=txtStory>C<SPAN =HIGHLIGHTCOLOR0 id=txtStory>) unit’s key talents.
The new compensation plan, to be announced early in October, will increase
the payout to 80% of the firm’s almost 15,000 brokers, specifically those who
bring in at least $300,000 in commissions and fees annually.
The top brokers - those producing more than $1 million annually - will
receive 46% of their annual production, an increase from the current 42%,
people familiar with the plan said.
The company will also end the practice of limiting the payout on the first
$5,000 in monthly commissions and fees to 20% of production, which effectively
slashed commissions of high-revenue financial advisors.
The new pay structure follows a vow earlier this year by Sallie Krawcheck,
head of global wealth management at Citigroup, to simplify and improve the
compensation structure of brokers affected by a recent pay cut.
With the fierce battle to retain top brokers, the earlier pay cuts resulted
in the defection of some Smith Barney talents to rival firms, which have been
paying more than 200% of the brokers’ annual production to lure those with
significant assets.
Brokers with sizable assets are prime recruits on Wall Street amid the
industry’s ongoing shift from transactional to fee-based business, which is
tied to the size of clients’ assets.
In a memo to branch managers Wednesday, Krawcheck said the new 2008
compensation plan puts Smith Barney "firmly on the offense, and more
importantly - it reflects our culture of rewarding loyalty and hard work, and
taking care of our partners and families."
A spokeswoman at Citigroup said the company will divulge specifics of the
pay package after discussing it with internal partners early next month.
Smith Barney last rejiggered its compensation plan in December. The company
made the changes to offset almost $100 million in expenses it shouldered when
it eliminated some deductions costs previously borne by brokers.
Labor lawyers who represented brokers suing firms on overtime pay argued
that the companies made deductions to brokers’ pay that violated certain state
laws against shifting the cost of doing business to employees.
Under the 2007 pay scheme, Smith Barney brokers who have been with the firm
for more than five years are now paid 20% on the first $5,000 in monthly
revenue, affecting big-ticket brokers who are paid more than 40% of their
annual gross revenue.
Those bringing in $1 million a year also got a one percentage-point haircut
in total payout under the current, 2007 plan, while those with $750,000 and
up, who were paid 41.5% of their production, started taking home 41.25% this
The mid-ranking brokers, however, saw a slight gain depending on their
length of stay in the 2007 plan. Those who have been at the firm for more than
nine years and have $300,000 to $400,000 in production saw a quarter of a
percentage-point increase in their pay, including those who produce $300,000
to $350,000 and have been at Smith Barney for less than five years.
In coming up with the new, 2008 compensation plan, “The charge was not to
’fix’ wage and hour,” Krawcheck said in an internal memo. “The charge was more
strategic: to create the #1 comp plan on Wall Street for the best financial
-By Evelyn Juan, Dow Jones Newswires; 201-938-2312; [email protected]

(END) Dow Jones Newswires
09-19-07 1134ET
Copyright © 2007 Dow Jones & Company, Inc.

Sep 19, 2007 10:41 pm

They tweak our pay every year.  It really makes no difference. You want a pay increase? Bring in more assets.  You, not the firm, controls your compensation.

Sep 20, 2007 9:19 am


They tweak our pay every year.  It really makes no difference. You want a pay increase? Bring in more assets.  You, not the firm, controls your compensation.


Sounds like a manager..

While there was quite a bit of tweaking in the past, it was never an across the board pay cut. In the last few years, certain types of business have seen their payout decline dramatically (institutional business from standard grid to 20%, with ticket charges, for example). The decision to make the brokers bear the cost of this recent lawsuit was rather unprecedented.

While I agree with what you're saying generally, the reality is that the recent payout reduction was a significant break in tradition and SB really put itself at the bottom of the payout grids for wirehouses. The weight was being disproportionately placed on younger producers and it wasn't accompanied by any increased payouts anywhere else. As a consequence, SB has the highest attrition rate in the industry, particularly among younger producers, who looked at the MS or ML grid and rightly felt that they were getting screwed.

Krawcheck really had no choice, but to initiate these changes. Nevertheless, I applaud her decision. 

Sep 20, 2007 6:32 pm

I'm sure C shareholders are really pumped that they are paying even below average fcs more. Wasn't she on some million dollar march a few years ago (ie get the firm average at a million tt per fc)? 

Brokers will still leave for the upfront packages, they might stick around for the higher commish.

Sep 21, 2007 9:08 am

What is your problem with C shares? Gordon.

Sep 21, 2007 9:37 am

[quote=vbrainy]What is your problem with C shares? Gordon.[/quote]

C is Citi's ticker symbol...