Let Sellers Keep Skin in the Game

“Our futures, as well as the success of the firm, were intertwined. Billy Salomon had wisely structured a unique compensation system. Salaries were actually quite low,4 but at the end of the year Salomon Brothers would distribute bonuses, based on how the firm as a whole had performed. However, we could draw only 5 percent of our capital, which meant the bonus money was invested with the firm. Consequently, the fate of the partners was directly linked to the success of Salomon Brothers, which fostered a clannish connection within that boiling cauldron of activity. It was understood that apart from our homes, insurance policies, and bank accounts, we didn’t have interests separate from the firm’s and we didn’t make investments outside the firm. All for one, one for all.”

“Keep in mind, that the above describes just a portion of what might be occurring on the Salomon floor. Simultaneously, there might be a government auction going off, and a corporate bond underwriting underway, and perhaps a block trade going down at the equity desk. It was boiling cauldron of barely contained chaos, and I loved every minute of it.”