NationsBanc Montgomery LLC has revised its equity coverage and altered the compensation structure for its analysts, said Thomas A. Thornhill 3d, head of equity research at the BankAmerica Corp. unit.

Mr. Thornhill said he took advantage of an opportunity created by the September departure of Montgomery's founder, Thomas Weisel. Twelve Montgomery analysts followed Mr. Weisel to his new firm.

Mr. Thornhill said he has "upgraded" Montgomery's equity coverage. Most of the seven analysts he has hired this year rank high in the analyst league tables compiled by The Wall Street Journal and Institutional Investor.

But Mr. Thornhill said client opinion was the major factor behind his hiring decisions. "Of course we would expect these analysts to raise our standings in the external polls, but our criteria for these hires was the feedback we got from large institutional investors," he said.

Montgomery also has changed the measuring stick used for analysts' yearend bonuses, putting more emphasis on buy-side opinion, he said.

Historically, Montgomery analysts had been rewarded for their support of the firm's corporate finance team, said Mr. Thornhill and other market sources.

"The old Montgomery had a strong distribution arm," Mr. Thornhill said. "The research product was generally good, but it was undermarketed to the firm's institutional client base."

This may have affected Montgomery's standing in the league tables. It was ranked 19th in the Institutional Investor list of equity research teams last year. It tied for 24th in The Wall Street Journal All-Star Analysts ranking; three Montgomery analysts were recognized for their stock-picking ability and three for the accuracy of their estimates.

Changes in the incentive structure were reflected in the bonuses that Montgomery paid in December. Mr. Thornhill speculated that this may have led to some of the analyst departures since then. "One assumes that Thom Weisel is running his new firm the same way he did his old one," Mr. Thornhill said.

Though Montgomery executives decided to make these changes on their own, BankAmerica's merger last fall with Montgomery's former parent company, NationsBank Corp., has led to adjustments in research coverage, Mr. Thornhill said.

"We lined up our areas of coverage to see where we matched the strengths of the bank and what we could expand on," he said.

Areas he chose to expand include health-care services, energy, and retail - all sectors in which the new BankAmerica has strong lending relationships. He said he plans a couple more strategic hirings soon, including one of a chemical sector analyst.

Todd Richter was hired this month from Morgan Stanley Dean Witter & Co. to be a senior managing director and head of health-care coverage. Mr. Thornhill said this helps shift Montgomery's traditional focus on the biotechnology sector to health-care services.

Two more hirings fill out sectors that have traditionally been strong at the banking company. William B. Randol was hired to be a senior analyst in the petroleum sector, and Gary Giblen joined the company as a senior analyst of food and drug retail chains.

A portfolio strategist post was created for Tom McManus, who joined the firm in January from Morgan Stanley. He is based in New York and reports to John Skeen, Mr. Thornhill's predecessor as research chief who was named director of portfolio strategy in November.

Three more analysts have been hired recently to succeed some of those who left.

Alan Braverman was hired from Deutsche Bank Securities to succeed David Readerman as head of Internet research. Mr. Readerman, a highly regarded Internet analyst, was one of the first executives to follow Mr. Weisel to his new venture.

Howard M. Block was hired from BancBoston Robertson Stephens to be an education services analyst, and Stacy Jamar was hired from Citigroup's Salomon Smith Barney to be a restaurant analyst.

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