Wall Street salaries come into focus in UBS lawsuit
A lawsuit filed on Sep 12 in New York provides a rare glimpse of salaries in the municipal bond business on Wall Street.
By Agencies |
NEW YORK: How much do you make? Unless you’re a public servant or a top executive at a corporation, the answer is usually 'None of your business.' A lawsuit filed on September 12 in New York provides a rare glimpse of salaries in the municipal bond business on Wall Street, which usually sees pay as the equivalent of a state secret. And the answer is: That’s all?
Americans are treated to tales of the fabulously overpaid on a daily basis, and nowhere, it seems, are they more luridly, obscenely overcompensated than in the money business. Pick up any magazine that specialises in finance and it sometimes seems as if the only people they write about make $25 million, $35 million, $100 million a year. Doesn’t everyone on Wall Street make that? Doesn’t everyone make that? What’s wrong with you?
This is why the lawsuit filed by William J Jester, former head of the municipal bond department at UBS Securities, is such an eye-opener. "Mr Jester was compensated with a $1,50,000 base salary and annual bonuses," the lawsuit says. "Through 2003, Mr Jester’s bonus compensation had increased in each year of his tenure with UBS, peaking at $10,00,000 cash plus an award of 5,000 stock options for year-end 2003."
In the first Austin Powers movie, you may recall, Dr Evil, freshly resuscitated from a cryogenic deep-freeze in the 1960s, threatens to blow up the world unless he is given the sum of one million dollars. The world laughs him off.
I have to admit that the paragraph on William J Jester’s peak salary stopped me cold. Hold it, this is Wall Street — that number can’t be right. Don’t they all make tens of millions?
Not only that, but the municipal bond business has been booming the last few years, with states and localities selling record amounts of bonds. In 2002, $358 billion was sold. This was topped in 2003, when $384 billion was sold, and again in 2005, when $408 billion was sold.
Jester, who has been in the municipal bond business for three decades, was chairman of the Municipal Securities Rulemaking Board for the 2003-2004 term. Now, $1 million is about 23 times the average annual pay in the US. On Wall Street it still looks skimpy. Jester is suing UBS for age discrimination. UBS has declined to comment. The lawsuit recounts how he was eased out, and makes for oddly compelling reading, especially for those of us who now hear someone’s age and think, "as young as that."
In 2004, Jester’s bonus was cut to $8,00,000 plus the usual 5,000 stock options. At the end of 2005, Jester received a performance rating of ‘below profile’ for the first time. He asked his boss, Terry Atkinson, about it, and at first was told his rating would be raised to the usual ‘exceeds profile.’ Atkinson "subsequently told Mr Jester that he could not do so," the suit says. He changed the rating to ‘meets profile.’ That year, Jester’s bonus was cut to $6,25,000, and no stock options.
In 2006, UBS was making changes. The municipal bonds group was transferred to the bank’s investment banking division.
On January 25, 2006, according to the lawsuit, Jester was replaced as head of the municipal bond department by someone who is now 47. In May, UBS named a banker who is 45 to replace Atkinson, then 58, as head of the Municipal Securities Group.
the unkindest cut of all: "Upon information and belief, these new, younger hires were compensated with multiples of what Mr Jester earned in his best year at UBS," says the lawsuit.
Jester retired on March 1. He isn’t going quietly.
Americans are treated to tales of the fabulously overpaid on a daily basis, and nowhere, it seems, are they more luridly, obscenely overcompensated than in the money business. Pick up any magazine that specialises in finance and it sometimes seems as if the only people they write about make $25 million, $35 million, $100 million a year. Doesn’t everyone on Wall Street make that? Doesn’t everyone make that? What’s wrong with you?
This is why the lawsuit filed by William J Jester, former head of the municipal bond department at UBS Securities, is such an eye-opener. "Mr Jester was compensated with a $1,50,000 base salary and annual bonuses," the lawsuit says. "Through 2003, Mr Jester’s bonus compensation had increased in each year of his tenure with UBS, peaking at $10,00,000 cash plus an award of 5,000 stock options for year-end 2003."
In the first Austin Powers movie, you may recall, Dr Evil, freshly resuscitated from a cryogenic deep-freeze in the 1960s, threatens to blow up the world unless he is given the sum of one million dollars. The world laughs him off.
I have to admit that the paragraph on William J Jester’s peak salary stopped me cold. Hold it, this is Wall Street — that number can’t be right. Don’t they all make tens of millions?
Not only that, but the municipal bond business has been booming the last few years, with states and localities selling record amounts of bonds. In 2002, $358 billion was sold. This was topped in 2003, when $384 billion was sold, and again in 2005, when $408 billion was sold.
ADVERTISEMENT
In 2004, UBS was the top underwriter of municipal bonds. When it hasn’t been No 1, it’s been No 2 (UBS acquired PaineWebber, a municipal bond powerhouse, in 2000).Jester, who has been in the municipal bond business for three decades, was chairman of the Municipal Securities Rulemaking Board for the 2003-2004 term. Now, $1 million is about 23 times the average annual pay in the US. On Wall Street it still looks skimpy. Jester is suing UBS for age discrimination. UBS has declined to comment. The lawsuit recounts how he was eased out, and makes for oddly compelling reading, especially for those of us who now hear someone’s age and think, "as young as that."
In 2004, Jester’s bonus was cut to $8,00,000 plus the usual 5,000 stock options. At the end of 2005, Jester received a performance rating of ‘below profile’ for the first time. He asked his boss, Terry Atkinson, about it, and at first was told his rating would be raised to the usual ‘exceeds profile.’ Atkinson "subsequently told Mr Jester that he could not do so," the suit says. He changed the rating to ‘meets profile.’ That year, Jester’s bonus was cut to $6,25,000, and no stock options.
In 2006, UBS was making changes. The municipal bonds group was transferred to the bank’s investment banking division.
ADVERTISEMENT
In January, Atkinson told Jester that the bankers were all "young and aggressive" and that "they don’t think we are properly staffed." On January 25, 2006, according to the lawsuit, Jester was replaced as head of the municipal bond department by someone who is now 47. In May, UBS named a banker who is 45 to replace Atkinson, then 58, as head of the Municipal Securities Group.
ADVERTISEMENT
In October, Jester’s replacement left UBS, and a banker who is 34 took over sales and trading. In November, UBS hired another banker who was ‘in her mid-30s’ to run Issuer Derivatives and Structured Products. And then, the unkindest cut of all: "Upon information and belief, these new, younger hires were compensated with multiples of what Mr Jester earned in his best year at UBS," says the lawsuit.
Jester retired on March 1. He isn’t going quietly.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
