Morning Coffee: Inside Michael Klein’s deal at CS First Boston. When your boss rants incoherently at 2am
CS First Boston could be a lucrative place to work. And for no one more so than its boss, Michael Klein, who, as Financial News noted yesterday, has been handed a swathe of top jobs, both at Credit Suisse itself and at its derivative "super boutique" that will - hopefully - be set to float free via an IPO.
Klein's trio of titles are: chief executive of banking at Credit Suisse, head of Credit Suisse's Americas operation and CEO designate of CS First Boston. It's not clear what Klein is being paid in salary or bonus for these jobs, but it is known that Credit Suisse is paying $175m for the sale of his boutique, M Klein & Co., whose 40 employees will come and work for him at Credit Suisse. Most of that money is presumed to be going to Michael, although his brother Mark - who describes himself as the majority shareholder of M Klein & Co. may be a more significant beneficiary.
As Breaking Views points out, the Klein's deal is a curious one. The $175m Credit Suisse is paying for M Klein & Co. implies that each of its dealmakers is worth over $4m, whereas $3m is the norm at the likes of Moelis and Perella Weinberg. Of the $175m, $100m is being paid in a convertible note that will turn into discounted shares in CS First Boston when and if it goes public. Michael and anyone else who owns shares in his company will also share $75m in equity warrants and cash.
But what if CS First Boston never goes public? In this event, Breaking Views says Klein will just get some Credit Suisse stock instead. And given that Credit Suisse currently trades at just 25% of tangible book value and will (hopefully) increase one day, this might not be a bad option either.
Separately, however intolerable your boss is in banking, chances are that Elon Musk is worse.
Yesterday, it emerged that Musk had fired a senior Twitter engineer after demanding to know why more people weren't seeing his personal Tweets. “I have more than 100 million followers, and I’m only getting tens of thousands of impressions,” ran Musk's alleged complaint. When a principal engineer suggested that Musk's dwindling popularity might be because this time last year he was buying Twitter and everyone wanted to read his posts, Musk declared, "You're fired."
The same article says Twitter staff are now regularly sleeping in the 8th floor bedrooms at the San Francisco headquarters, and that Musk - who works 120-hour weeks - has a tendency to fire off incoherent commands in early hours. "There’s times he’s just awake late at night and says all sorts of things that don’t make sense,” says one employee. “And then he’ll come to us and be like, ‘this one person says they can’t do this one thing on the platform,’ and then we have to run around chasing some outlier use case for one person.”
Credit Suisse thinks it will be profitable by 2024. (Bloomberg)
If Credit Suisse's wealth management business keeps declining, it will erode the $4bn of capital the bank raised to cushion its losses and make it harder to restructure the bank. (WSJ)
“Traders are leaving them and clients are leaving them. But they’ve still got the infrastructure and cost base of a major investment bank.” (IFR)
Apollo Global created Atlas SP Partners out of its Credit Suisse securitized products purchases and as we predicted, Jay Kim is the new boss. (Reuters)
Caroline Ellison didn't seem like the CEO of Alameda Research. “Caroline didn’t have a lot of gravitas. The first time I met her I thought she was an intern.” (Financial Times)
Alliance Bernstein is cutting 100 people in the UK and the US. (Bloomberg)
Goldman Sachs and JPMorgan are advising Jim Ratcliffe the billionaire on a deal to buy Manchester United. (Bloomberg)
Goldman Sachs partners are holding their annual meeting in a Miami Beach hotel where cappuccinos cost $9 and rooms cost $1.5k a night. (Business Insider)
Yahoo is laying off 20% of its staff. (Techcrunch)
Github is laying off 10% of its staff. (Techcrunch)
The wife of Izzy Englander, founder of hedge fund Millennium, went off with another woman and he doesn't seem to have been at all happy about that. (New York Post)
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