These are supposed to be the dog days of Wall Street, right? Investment bankers are getting fired, salaries and bonuses are being slashed, firms are cutting departments. Well, things aren't exactly gloomy for one young bond trader! at Salomon Brothers Inc! The investment firm confirmed last week that Lawrence Hilibrand, 31, was paid an astonishing $23 million in salary and bonus last year. The Wall Street Journal labeled him SALOMON'S $23 MILLION MAN, noting that his compensation was more than what most chief executives make in a year.
Why is Hilibrand worth so much? He's not a master-of-the-universe investment banker, cutting billion-dollar deals for million-dollar commissions. Instead, he trades bonds as part of a tiny arbitrage group, betting billions of dollars on slight price differences between securities. Using complex mathematical formulas, Hilibrand and his colleagues obviously bet right last year. They produced profits of some $400 million for Salomon. Better yet, they had negotiated a pay deal with Salomon management giving them 15 percent of any trading profits, or $60 million. Salomon chairman John Gutfreund was described as embarrassed by Hilibrand's paycheck. Some of Salomon's investment bankers, the stars of the 1980s, were seething. Their bonuses were cut about 20 percent, reflecting the recent slowdown in big takeovers. Yet as Hilibrand proved, there's always money to be made on Wall Street.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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