Glickenhaus to cut muni salaries, bonuses; exodus of high-paid employees expected.

Glickenhaus & Co. yesterday said it will dramatically reduce salaries and bonuses to municipal bond executives, a move that will probably force more than half of these employees to flee the regional bond firm, a high-ranking company executive said.

The company informed employees yesterday about the new compensation package, and the executive said he expects defections to follow shortly. So far, Glickenhaus has cut six municipal bond executives, but as many as 13 employees from the department will probably leave in the coming days and weeks, the executive said.

Many of the market's largest firms, including Goldman, Sachs & Co., CS First Boston Co., and Lehman Brothers, have announced major cuts in their muni staffs. Many others are expected to do so in the coming weeks and months.

The executive, who asked not to be named, said Glickenhaus instituted the leaner compensation package to reduce salaries amid one of the worse market slumps in decades.

He denied charges that the firm designed the system to force out sales representatives and others, who despite the market's slowdown would earn salaries and commissions totaling several hundred thousand dollars a year.

In fact, the company will seek out other executives willing to work for substantially less money than those who will depart, the executive said.

The moves announced by Glickenhaus, which specializes in negotiated bond business in the Northeast, come as the market is experiencing one of its worse contractions in decades.

New-issue volume so far this year has fallen about 44% from levels achieved last year, and a spike in interest rates has made trading unprofitable.

For its part, Glickenhaus also experienced a significant reduction in its negotiated underwriting business from levels achieved last year. Although the company has increased its market share and rankings in 1994, the firm served as senior manager or co-manager on $4.6 million of negotiated issues, compared with $9.1 million last year.

When asked if the company's muni department is losing money, the Glickenhaus executive said, "These are not the best of times, but we are confident the new form of compensation and a stable market will help the firm do better."

The executive said the compensation moves will achieve the twin goals of reducing overhead and keeping employees willing to work at lower salaries. Under the compensation system, sales representatives will no longer receive commissions.

Instead, all employees will receive a bonus based on performance, the executive said. The new compensation method will not only reduce what sales representatives make, but traders and bankers will also receive a lower level of compensation, the executive said.

"We believe the business is changing," the executive said. "And we believe this is an equitable way of doing business."

He would not name those employees who will leave the municipal department and said the compensation system will not affect other areas of the firm's operations.

Yesterday, speculation swirled about the future of investment bankers Francis B. McKenna and John A. Marino.

In July 1992, Glickenhaus restarted its municipal public finance department after a three-year hiatus, and hired McKenna to head the group.

McKenna had started the public finance department at Roosevelt & Cross Inc., and in April of 1993, he added John A. Marino, former chairman of the state Democratic Party, to Glickenhaus' fledgling investment banking group.

Neither McKenna nor Marino, who took a temporary leave from the firm to work on New York Gov. Mario M. Cuomo's failed reelection campaign, could be reached for comment. The executive said it is unclear if either will remain with Glickenhaus.

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