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Allen Wheat, CS First Boston: Wheat and the chaff

Since taking charge of CS First Boston in 1993, Allen Wheat has done much to improve the firm's profitability. The payoff for employees was supposed to be a fairer allocation of bonuses. Many bond traders felt it didn't work that way this year and some left in disgust, making odious comparisons between their own thinner pay checks and those of supposedly key employees. Peter Lee reports

Allen Wheat, president of CS First Boston, took home an excellent pay packet last year: $9 million. Some would say he deserved it. In 1995, though not the firm's best-ever year, CS First Boston recorded net income of $207 million, 33% better than the $156 million it made in 1994.

With an annual salary of that magnitude, Wheat must have built up enough personal wealth to keep him in comfort if he ever grew sick of his present job and decided to walk away from it. It would be more than enough to start up his own derivatives trading boutique. Why might Wheat entertain such thoughts just two and a half years after becoming president and why do CS First Boston staff gossip about the possibility?

Wheat is now striving to stabilize the firm following its first big crisis since his tenure began. This March, dozens of senior bond dealers left CS First Boston in New York, outraged by poor bonuses. Although most parts of the bond business had been profitable in 1995, a weak performance in mortgage-backed securities - that business lost around $70 million - lowered profits for the fixed-income group as a whole.



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