VEP: Bear Stearns 2003 (Vault Employer Profile)

VAULT EMPLOYER PROFILE: BEAR STEARNS

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EMPLOY PROFILE VAULT EMPLOYER PROFILE:

BEAR STEARNS

© 2002 Vault Inc.

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EMPLOY PROFILE VAULT EMPLOYER PROFILE:

BEAR STEARNS

BY THE STAFF OF VAULT

© 2002 Vault Inc.

Copyright © 2002 by Vault Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault Inc. Vault, the Vault logo, and “the insider career networkTM” are trademarks of Vault Inc. For information about permission to reproduce selections from this book, contact Vault Inc., 150 W22nd Street, New York, New York 10011, (212) 366-4212. Library of Congress CIP Data is available. ISBN 1–58131–192–3 Printed in the United States of America

Bear Stearns

INTRODUCTION

1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Bear Stearns at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

THE SCOOP

3

History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 League Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

ORGANIZATION

25

CEO’s Bio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Business Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Key Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28

VAULT NEWSWIRE

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Select Recent Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

OUR SURVEY SAYS

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GETTING HIRED

39

Hiring Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Questions to Expect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Questions to Ask . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 To Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

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ON THE JOB

43

Job Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 A Day in the Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Career Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

FINAL ANALYSIS

49

RECOMMENDED READING

51

Bear Stearns

Introduction Overview Bear Stearns & Co. is younger than many of its high-profile rivals, but the firm’s reputation stands up to those of its competitors. Known as “Bear” to Wall Street players, the venerable institution is one of the nation’s top investment banking, securities trading and brokerage firms. With a gamut of financial services available, Bear Stearns serves as financial advisor to many of the nation’s major corporations, and its clearing operations are a top choice of brokerage and other investment firms, including many of its own rivals. With more than 75 continuous years of profitability under its belt, Bear Stearns is one of Wall Street’s most influential firms and, according to Institutional Investor magazine in April 2002, is the seventh largest securities firm in terms of total capital. The firm recently went through a changing of the guard. In June 2001, Alan “Ace” Greenberg resigned as chairman after 52 years with the firm. Greenberg earned a reputation as a cost-cutter, mainly because of his 1996 book, Memos from the Chairman, a collection of his witty memos to his staff. Ace recommends reusing broken rubber bands (he suggest tying the ends together) and conserving paperclips. Bear Stearns employees were even encouraged to snitch on colleagues who weren’t as thrifty as Ace would have liked. These extreme examples reveal a lean organization; Bear had approximately 11,000 employees in 2001, nearly half competitor Goldman Sachs and one-sixth that of Morgan Stanley. Don’t think Greenberg’s departure means a new lavish culture. CEO James Cayne, who assumed the role of chairman after Greenberg, indicated that management wouldn’t change its ways. Whether professionals will still have to monitor paper clip usage remains to be seen.

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Bear Stearns at a Glance Headquarters 383 Madison Avenue New York, NY 10179 Phone: (212) 272-2000 www.bearstearns.com

DEPARTMENTS Asset Management Custodial Trust Derivatives Equities Fixed Income Global Clearing Services Investment Banking Merchant Banking Private Client Services

THE STATS Chairman and CEO: James E. “Jimmy” Cayne Employer Type: Public Company Ticker Symbol: BSC (NYSE) 2001 Revenue: $8.7 billion 2001 Net Income: $619 million No. of Employees: 10,452 No. of Offices: 22

UPPERS • Responsibility for juniors • Top of the pay scale

DOWNERS • Company strives to cut corners • Sink-or-swim culture not good for those who can’t swim

THE BUZZ

WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING

• “Almost bulge bracket” • “Takeover target” • “Strong firm with basic industry focus” • “Still macho” • “Honorable mention” • “Rough and tumble trading culture” • “Old-school, prestigious” • “Going no place fast”

KEY COMPETITORS Deutsche Bank J.P. Morgan Chase Lehman Brothers Merrill Lynch

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Bear Stearns

The Scoop History Humble beginnings More than seven decades is a long time to go without an unprofitable year, but Wall Street luminary Bear Stearns has accomplished just that. Since its founding in 1923, the firm has never operated at a loss. With about half a million dollars in capital among the three of them, Joseph Bear, Robert Stearns and Harold Mayer started Bear Stearns at the beginning of the Roaring Twenties. Founded as a partnership, the firm initially focused on brokerage services, operating with a small staff out of a single office at 100 Broadway. Bear Stearns didn’t gain its iconic status immediately, though the firm did get noticed early in its history. Six years after setting up shop, Bear Stearns survived the stock market crash without laying off a single employee. The next decade brought massive changes, both to the market and to Bear. The rise of the age of government regulation, though, did not hamper Bear Stearns’ growth as much as it did rivals like J.P. Morgan. Bear eventually outgrew its office and moved into a much larger space at 1 Wall Street. Through the 1930s and 1940s, the firm added some important businesses. In 1933 Bear Stearns established a department devoted to corporate bonds and, in 1940, began trading municipal bonds. Early in the 1940s, it also put together a utilities department that primarily dealt with the breakup of massive utilities holding companies. A year later, Bear Stearns established its investment banking division. In 1949 the company’s history quietly changed as the legendary Alan “Ace” Greenberg came aboard.

Beyond Wall Street Bear opened its first branch office in Chicago in 1940 but waited another decade and a half before opening another. When it eventually decided to open another office, it looked abroad, to the Netherlands, opening an office in Amsterdam in 1955. During the 1950s and 1960s, the company would owe much of its growth to the tough policies of Salim “Cy” Lewis – a stickler for rules who also earned a reputation for hard drinking. Lewis’ reign was marked by rapid expansion during which the firm opened offices in Geneva, Paris, San Francisco and Los Angeles within a five-year span in the 1960s.

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Bear Stearns The Scoop

By 1971 the firm had once again outgrown its headquarters. Bear Stearns found new accommodations at 55 Water Street and quickly set up shop in its 180,000 square feet of space. As the new headquarters was opening, Bear Stearns was expanding into other markets, opening offices in Dallas, Atlanta and Boston. Setting its sights across the Atlantic, Bear Stearns opened a London office in 1980. As the decade drew on, Bear increased its standing in Latin America and has been one of the leading equity underwriters in the region. As the firm’s offices expanded, so did its services. In 1974 Bear added its now-powerful clearing business (processing stock transactions for smaller brokers) to its repertoire. Several years later it formed a high-yield bond (junk bond) department, which also became one of the firm’s hallmarks. Moreover, Bear Stearns was able to boost its image by being the only firm to remain in the New York City bonds game during some of the city’s leanest years. The firm also found profitability in its empty office space – freelance brokers could rent out space from Bear for free, as long as they cleared trades through the firm. Though stung by the death of Cy Lewis in 1978, Bear Stearns rebounded with an even thriftier, harder dealing CEO in Greenberg. The Oklahoma native would earn a reputation for his eccentricities – and be credited as a genius for the success that Bear Stearns has since enjoyed.

Toward the 21st Century In 1985 Bear Stearns took the important step of making a high-profile initial public offering. The rest of the decade was marked by expansion into Japan, increased work throughout the European market, and dealings with the likes of the Federal National Mortgage Association (Fannie Mae). As the decade closed, Bear Stearns moved its home base once again, taking up residence at 245 Park Avenue in midtown Manhattan. The 1990s were not as welcoming to Bear Stearns (at least at first). Junk bonds, in particular, proved a thorn in the side of the firm as it was increasingly hit by lawsuits resulting from its underwriting activities. The Bear took its worst hit in 1994 when the bond market collapsed. Suffering lowered earnings and the exodus of several top-level bond traders, Bear Stearns took longer to recover from the crash than did much of its competition. Still, aside from expanding through offices in new global markets, Bear Stearns earned industry distinction by picking up several highprofile clients. In 1996 the company made history as it lead-managed consecutive offerings for the big three of the automotive industry – Chrysler, Ford and General Motors. Not satisfied with that entry in record books, Bear

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Bear Stearns The Scoop

Stearns served as financial advisor in 1997 to NYNEX during its “merger-ofequals” with Bell Atlantic. In late 1999, Bear Stearns announced a change in its fiscal year-end from June 30 to November 30, lining up with other Wall Street firms such as Morgan Stanley, Goldman Sachs and Lehman Brothers. Historically, with Bear’s summer year-end, the firm paid bonuses to employees in August. This made Bear’s workforce particularly vulnerable to competitors, who would try to poach Bear bankers in the early fall. According to Investment Dealers’ Digest, Bear’s “oddball fiscal year and its all-cash compensation structure” allowed Bear employees to “walk out the door with their full paychecks in hand every August.” With the change, bankers were paid bonuses in January, which is generally the practice at other firms.

Close, but no Cuban One of the few companies in America that can boast of 76 consecutive profitable years, Bear Stearns’ striking success is attributed in part by its leaders and its commitment to a strategy of controlled growth with an eye toward long-term results. But despite consistent returns – the firm has topped 18 percent in return on equity (a common yardstick for a well-performing Ibank) for four straight years – Bear Stearns has not broken into Wall Street’s upper I-banking echelon. Apart from businesses such as public finance (underwriting and issuing municipal bonds), in which the firm ranks in the middle of the top five consistently, and mortgage-backed securities, in which it consistently ranks in the top three, Bear Stearns usually hovers around the bottom of the top 10 in the league tables.

We’re still talking major bank Nonetheless, Bear is still a major Wall Street player. In recent years, it has been tapped for some of the world’s biggest deals. The firm advised Starwood Lodging in its high-profile $13.7 billion acquisition of ITT (in 1997), Walt Disney in its $18.8 billion acquisition of Capital Cities/ABC (in 1996), and NYNEX in its $52 billion “merger of equals” with Bell Atlantic (also in 1996). Bear Stearns continues to be a prime M&A resource. In 2002 Bear Stearns had its hand in one of the largest drug deals on the Street. In a transaction announced in July, Bear co-advised Pfizer on its $59.5 billion acquisition of Pharmacia. In 2001 Bear Stearns came in 10th in announced U.S. merger and acquisition advisory, working on 89 deals worth $75.3 billion, according to Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Thomson Financial. Bear was an adviser to Hughes Electronics in its $29.1 billion merger with EchoStar Communications, announced in August 2001. The firm also advised Amgen in its $16.5 billion purchase of Immunex, announced in December 2001. In a deal announced the same day as the Amgen/Immunex merger, Bear represented USA Networks in the sale of its entertainment assets to Vivendi Universal for $11.3 billion. Bear Stearns recently co-lead managed several equity deals, including three big deals in June 2002: $156 million IPO for Inveresk Research Group, the $182 million IPO for CTI Molecular Imaging, and the $210 million IPO for Pacer International. Bear Stearns also acted as co-lead manager Aeropstale’s $225 million IPO; Bear Stearns’s investment in and work on the retailer’s IPO generated $260 million in net income, over half of Bear’s total net income recorded in the second quarter 2002. Bear Stearns has also relished the sweet taste of success in the fixed income markets. The firm lead-managed the largest municipal bond issue ever – a $3.5 million issue for the Long Island Power Authority in 1998. In 2001, Bear placed fifth among all municipal issues, according to Thomson Financial. And for the six months ended June 30, 2002, Bear placed third among all muni bond issuers. Recent deals include lead managing a $500 million issue for TSAC Corp. in July 2002, a $1.7 billion issue for Badger Tobacco Asset in April 2002, and a $516 million issue for New York State Environmental, also in April 2002. In the corporate bond world, Bear Stearns has proven a heavy hitter, taking the lead role in an $8.4 billion offering for Ford Motor Credit Company, and a $1.36 billion offering for Lucent Technologies. More recently, Bear co-lead managed a $174 million offering for AmeriCredit in June 2002, a $275 offering for Hollywood Entertainment in April 2002, and a $200 million offering for Western Financial Bank, also in April 2002.

Size matters Given the firm’s cost-conscious reputation, it’s no surprise that Bear Stearns leans towards lean staffing. The firm has fewer total employees than Salomon Smith Barney, Morgan Stanley and Merrill Lynch have brokers. Bear Stearns avoided massive layoffs in 2001 when competitors like J.P. Morgan Chase and Credit Suisse First Boston were eliminating staff. The firm did cut approximately 800 people in early 2001, most from the technology department.

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Bear Stearns The Scoop

Clearing the way Bear Stearns makes more than a third of its profits, and 30 percent of its revenue, in its clearing business. Clearing firms basically do a lot of the paperwork that goes along with brokering, typically for smaller firms. In clearing, the firm is hired to execute trades, maintain client records, send out trade confirmations and monthly statements, and settle transactions. Close to 2,900 clients employ Bear Stearns for clearing, and the department has attracted rivals to the Bear’s services. Larger firms use Bear Stearns’ clearing services as well; Lehman Brothers is one. While Wall Street firms use the Bear for clearing, it is primarily smaller brokerages that use the firm’s services, as the firm’s prestigious name on paperwork investors receive is often a selling point.

For sale, if the price is right While most of the financial services world is abuzz about consolidating and merging, Bear Stearns has quietly been going it alone – and pulling in record profits. Rumors have popped up occasionally over the last several years pairing Bear with large commercial banks (Dutch giant ABN Amro is one rumored suitor; more recently, The Bank of New York has been cited as a Bear suitor.) Bear CEO James Cayne fueled merger rumors in July 2000, telling a Salomon Smith Barney research analyst the firm would consider selling for $120 per share – quite a premium, considering that the company’s shares closed at under $50 the day the report came out. Cayne also said the acquiring firm would have to be the right fit for Bear Stearns, allowing his firm’s famous entrepreneurial culture room to breathe. Cayne’s high asking price has some analysts doubting that the firm is serious about selling. “Jimmy Cayne’s comment is fairly typical,” an anonymous analyst told The New York Post. “It tells shareholders he would consider a sale, but it would be very expensive.”

Specialist purchase Bear took a step toward growing its business in February 2001 when it announced plans to buy Wagner Stott Mercator, said to be the fifth-largest specialist firm on the Big Board. (Specialist firms manage trades of specific stocks, as well as the trades of certain firms.) The purchase is being made in partnership with Hunter Partners, the seventh-ranked specialist firm. Bear Stearns owns 49.8 percent of Wagner Stott; Hunter owns the remaining 50.2 percent. Taking less than half interest in the firm means Bear won’t have to report Wagner liabilities on its balance sheet; Bear will have to report profit Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Bear Stearns The Scoop

and losses on its income statement, though. Wagner Stott counts Citibank and Merrill Lynch as its major clients, putting Bear Stearns in the unusual position of being in charge of the orders of two competitors. The transaction closed in April 2001.

Alan Greenberg: an “Ace” in the hole With the odd business guidelines handed down to Bear Stearns employees from the desk of former chairman Alan “Ace” Greenberg, people might think that the investment-banking powerhouse is scraping for pennies. Greenberg earned a national reputation for his humorous (and sometimes biting) memos, which were collected into a book entitled Memos From the Chairman. Greenberg’s memos have espoused the benefits of reusing rubber bands (if they’re broken, simply tie the loose ends) and conserving paperclips. Ace even encouraged employees to inform upon colleagues who might be breaking one of the chairman’s rules (this included professionals at all levels). In June 2001, Greenberg announced he was stepping aside as executive chairman and handing the reins over to CEO James Cayne. (Greenberg stayed on as chair of the executive committee, continuing a 52-year career with Bear Stearns.) Unlike many sudden high-level departures, Greenberg’s seemed truly amicable. Greenberg and Cayne had worked together for over 30 years, making a power grab by the younger executive unlikely. “I haven’t had a contentious moment with Alan in 32 years,” Cayne told BusinessWeek in July 2001. More importantly, Cayne denied Greenberg’s departure was part of a restructuring designed to make Bear Stearns more attractive to potential buyers. “[Am] I sprucing us up, going to market with a little apple in our mouths? Nah,” Cayne said to BusinessWeek. “We don’t have the right to say we’re not for sale because that’s absurd. But we feel there is a compelling reason for a firm that’s independent like us to be in the marketplace and remain independent.”

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Bear Stearns The Scoop

League Tables Global Debt & Equity Offerings: Jan 1, 2001 – December 31, 2001

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch CSFB J.P. Morgan Chase Goldman Sachs Morgan Stanley Lehman Brothers UBS Warburg Deutsche Bank BofA Securities Bear Stearns ABN Ambro Barclays Capital BNP Paribas DK Wasserstein INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

486.9 432.7 346.9 315.1 302.5 277.6 260.6 252.8 224.4 162.5 134.7 90.0 72.9 55.0 53.1 4,075.1

11.9 10.6 8.5 7.7 7.4 6.8 6.4 6.2 5.5 4.0 3.3 2.2 1.8 1.4 1.3 100.0

1,574 2,012 1,312 1,094 795 929 861 949 770 728 427 776 314 216 272 16,748

2,401.7 1,940.9 1,641.0 1,037.5 2,111.1 1,976.0 972.7 888.2 745.3 465.8 230.0 353.4 121.8 207.7 251.2 18,159.6

Source: Thomson Financial

RANK

Global Debt & Equity Offerings: Jan 1, 2002 – Jun 30, 2002

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch J.P. Morgan Chase CSFB Goldman Sachs Deutsche Bank Lehman Brothers Goldman Sachs UBS Warburg BofA Securities Bear Stearns Barclays Capital ABN Amro Royal Bank of Scotland HBSC Holdings INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

244.8 197.0 183.2 175.4 152.5 143.4 143.0 135.1 132.2 97.3 69.8 50.8 46.2 33.5 32.9 2,199.0

11.1 9.0 8.3 8.0 6.9 6.5 6.5 6.1 6.0 4.4 3.2 2.3 2.1 1.5 1.5 100.0

797 811 627 656 534 588 438 372 507 529 236 211 295 115 204 8,234

1,346.3 753.4 690.1 811.4 688.1 501.5 446.1 647.3 364.8 292.1 150.9 147.9 125.8 39.5 91.3 8,745.2

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Source: Thomson Financial

RANK

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Bear Stearns The Scoop

Global M&A Transactions (announced): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Goldman Sachs Merrill Lynch Morgan Stanley CSFB J.P. Morgan Chase Citigroup/Salomon SB UBS Warburg Deutsche Bank Lehman Brothers Dresdner Kleinwort Wass. Lazard Rothschild Bear Stearns Quadrangle CIBC World Markets INDUSTRY TOTAL

RANK VALUE ($BILLIONS)

# OF DEALS

602.8 477.0 460.6 395.3 388.4 264.9 227.9 224.1 123.2 120.7 103.5 90.1 78.2 72.5 37.1 1,751.9

339 255 313 455 403 331 239 253 148 89 161 168 71 2 101 28,885

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

Global M&A Transactions (announced): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER CSFB Goldman Sachs Citigroup/Salomon SB Morgan Stanley J.P. Morgan Chase UBS Warburg Merrill Lynch Deutsche Bank Lehman Brothers Rothschild Lazard BNP Paribas Cazenove Dresdner Kleinwort Wass. RBC Capital Markets INDUSTRY TOTAL

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RANK VALUE ($BILLIONS)

# OF DEALS

124.5 110.9 108.3 95.9 94.2 93.5 90.8 75.2 69.7 68.5 42.0 23.1 18.9 18.2 16.5 590.3

191 123 117 132 155 109 102 80 84 76 87 40 4 43 34 11,585

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Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

Global Equity & Equity-related Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Merrill Lynch Citigroup/Salomon SB Goldman Sachs Morgan Stanley CSFB UBS Warburg Lehman Brothers Deutsche Bank J.P. Morgan Chase Societe Generale Nomura BofA Securities ABN Amro BNP Paribas Credit Agr. Indo-Laz Frere INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

61.3 60.9 48.8 45.4 42.2 29.7 18.4 16.9 14.6 7.6 6.1 5.7 4.8 4.8 4.5 425.7

14.4 14.3 11.5 10.7 9.9 7.0 4.3 4.0 3.4 1.8 1.4 1.3 1.1 1.1 1.1 100.0

206 129 1,482 98 161 160 66 81 60 27 82 26 47 25 7 2,472

1,219.9 1,576.8 1,026.1 1,083.8 934.7 469.0 418.0 276.2 281.0 146.0 215.2 163.4 70.7 51.7 80.0 8,926.8

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

Global Equity & Equity-related Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Goldman Sachs Merrill Lynch CSFB Morgan Stanley Deutsche Bank J.P. Morgan Chase UBS Warburg Lehman Brothers Societe Generale Cazenove BofA Securities BNP Paribas Nomura Bear Stearns INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

31.2 27.5 24.5 16.6 12.6 12.2 11.2 9.0 7.0 4.3 3.7 3.3 3.2 2.8 2.2 201.1

15.5 13.7 12.2 8.2 6.3 6.0 5.6 4.5 3.5 2.1 1.8 1.6 1.6 1.4 1.1 100.0

118 57 81 84 45 50 48 72 34 18 16 18 12 34 22 1,180

802.4 473.9 524.4 489.6 337.3 147.5 221.6 151.3 206.8 45.6 24.7 82.1 26.2 89.3 99.7 4,218.2

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Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

Global Debt (Including MBS, ABS & Tax Munis): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch CSFB J.P. Morgan Chase Goldman Sachs Lehman Brothers Morgan Stanley UBS Warburg Deutsche Bank BofA Securities Bear Stearns ABN Ambro Barclays Capital BNP Paribas DK Wasserstein INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

429.3 367.4 303.7 299.2 238.7 237.9 255.7 220.8 206.8 156.2 130.7 83.0 72.3 49.8 49.2 3,609.7

11.9 10.2 8.4 8.3 6.6 6.6 7.1 6.1 5.7 4.3 3.6 2.3 2.0 1.4 1.4 100.0

1,345 1,778 1,130 1,026 649 756 796 773 680 700 402 723 312 189 259 14,033

1,157.5 640.5 696.1 725.6 445.4 456.9 730.4 372.0 461.5 302.4 116.4 240.2 206.1 149.4 168.9 8,372.6

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

Global Debt (Including MBS, ABS & Tax Munis): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

12

ADVISER Citigroup/Salomon SB Merrill Lynch J.P. Morgan Chase CSFB Goldman Sachs Lehman Brothers Deutsche Bank UBS Warburg Goldman Sachs BofA Securities Bear Stearns Barclays Capital ABN Amro Royal Bank of Scotland HBSC Holdings INDUSTRY TOTAL

CAREER LIBRARY

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

213.6 172.5 172.1 158.8 139.9 136.0 131.2 123.3 107.6 93.9 67.6 50.8 44.7 33.5 31.2 1,997.9

10.7 8.6 8.6 8.0 7.0 6.8 6.6 6.2 5.4 4.7 3.4 2.5 2.2 1.7 1.6 100.0

679 730 579 572 489 404 538 435 315 511 214 211 279 115 196 7,054

543.9 228.9 468.5 321.7 350.7 239.3 354.0 213.5 173.5 210.0 51.2 147.9 120.6 39.5 72.0 4,536.0

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. Debt & Equity Offerings: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch CSFB J.P. Morgan Chase Goldman Sachs Lehman Brothers Morgan Stanley UBS Warburg BofA Securities Deutsche Bank Bear Stearns ABN Ambro Royal Bank of Scotland Countrywide Securities Wachovia INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

394.5 350.0 278.7 248.0 244.1 232.0 189.7 180.8 160.2 133.4 132.3 38.5 36.0 26.0 23.8 2,880.1

13.7 12.2 9.7 8.6 8.5 8.1 6.6 6.3 5.6 4.6 4.6 1.3 1.2 0.9 0.8 100.0

1,277 1,741 1,029 869 624 758 644 595 715 404 420 539 116 457 161 12,269

1,807.4 1,399.8 1,178.1 782.1 1,737.2 809.5 1,463.1 462.8 458.4 314.5 219.2 104.7 9.3 40.6 31.1 11,437.2

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

195.8 169.1 148.5 145.0 126.8 118.6 103.9 94.5 93.9 82.7 69.2 25.8 18.1 16.8 15.0 1,537.4

12.7 11.0 9.7 9.4 8.3 7.7 6.8 6.1 6.1 5.4 4.5 1.7 1.2 1.1 1.0 100.0

635 706 504 513 368 397 288 343 518 308 234 85 198 93 119 5,796

1,042.0 6,006.3 536.1 605.8 396.1 574.0 504.0 221.6 279.9 283.4 145.9 6.1 6.3 36.1 26.3 5,720.4

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

U.S. Debt & Equity Offerings: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch J.P. Morgan Chase CSFB Lehman Brothers Morgan Stanley Goldman Sachs UBS Warburg BofA Securities Deutsche Bank Bear Stearns Royal Bank of Scotland Countrywide Securities Bank One Wachovia INDUSTRY TOTAL

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CAREER LIBRARY

13

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. M&A Transactions (announced with U.S. targets): Jan 1, 2001 – December 31, 2001

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

RANK VALUE

ADVISER

($BILLIONS)

Goldman Sachs Merrill Lynch Morgan Stanley CSFB J.P. Morgan Chase Citigroup/Salomon SB Deutsche Bank Lehman Brothers UBS Warburg Bear Stearns Quadrangle Lazard Dresdner Kleinwort Wass. BofA Securities Greenhill INDUSTRY TOTAL

410.3 289.2 285.0 272.6 234.1 144.2 118.4 87.3 81.3 75.3 72.5 32.0 24.5 23.5 20.4 825.7

# OF DEALS 167 112 138 199 149 112 62 86 66 60 2 37 30 57 11 7,533

Source: Thomson Financial

RANK

U.S. M&A Transactions (announced with U.S. targets): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER CSFB Goldman Sachs Citigroup/Salomon SB J.P. Morgan Chase Morgan Stanley UBS Warburg Merrill Lynch Lehman Brothers Deutsche Bank BofA Securities Lazard Bear Stearns Dresdner Kleinwort Wass. Rothschild ABN Amro INDUSTRY TOTAL

14

CAREER LIBRARY

RANK VALUE ($BILLIONS)

# OF DEALS

56.9 52.9 44.3 39.6 39.3 32.7 19.7 18.2 15.1 13.6 9.0 8.0 7.3 6.4 5.5 206.5

105 47 39 49 50 42 42 35 26 37 23 16 11 9 4 3,242

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. Equity & Equity-related Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Goldman Sachs Merrill Lynch Citigroup/Salomon SB CSFB Morgan Stanley Lehman Brothers UBS Warburg J.P. Morgan Chase BofA Securities Deutsche Bank Bear Stearns FleetBoston Financial CIBC World Markets ABN Amro Friedman Billings Group INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

43.6 39.9 31.3 29.7 28.7 13.7 10.4 9.6 5.7 4.6 2.7 1.0 1.4 0.9 0.7 228.9

19.1 17.4 13.7 13.0 12.5 6.0 4.5 4.2 2.5 2.0 1.2 0.4 0.6 0.4 0.3 100.0

94 157 108 120 70 51 63 42 25 36 17 8 12 6 14 769

1,331.4 863.1 668.4 724.6 791.8 333.0 273.7 206.1 162.5 100.2 94.0 20.0 39.4 23.0 38.8 5,893.9

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

U.S. Equity & Equity-related Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch Goldman Sachs CSFB Morgan Stanley J.P. Morgan Chase Lehman Brothers UBS Warburg Deutsche Bank BofA Securities Bear Stearns Friedman Billings Group CIBC World Markets RBC Capital Markets Thomas Weisel INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

21.1 20.2 16.2 13.4 9.4 7.7 5.5 3.6 3.4 3.3 2.2 1.0 0.5 0.5 0.5 112.8

18.7 17.9 14.3 11.9 8.4 6.8 4.8 3.2 3.0 2.9 2.0 0.9 0.4 0.4 0.4 100.0

73 66 39 68 31 36 32 46 25 18 22 13 9 2 4 460

611.3 435.3 381.2 432.8 287.7 162.3 190.8 120.0 96.1 81.8 99.1 51.5 19.7 17.6 23.5 3,183.6

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CAREER LIBRARY

15

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. Initial Public Offerings 2001: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

Goldman Sachs Merrill Lynch Citigroup/Salomon SB CSFB Morgan Stanley Lehman Brothers UBS Warburg J.P. Morgan Chase BofA Securities Deutsche Bank Bear Stearns FleetBoston Financial CIBC World Markets ABN Amro Friedman Billings Group INDUSTRY TOTAL

11,915.6 8,511.8 5,510.3 4,457.1 1,470.1 1,427.0 695.2 561.2 529.1 426.2 332.0 179.4 162.3 135.7 124.0 37,095.4

32.1 22.9 14.9 12.0 4.0 3.8 1.9 1.5 1.4 1.1 0.9 0.5 0.4 0.4 0.3 100.0

18 12 15 8 10 14 7 4 8 4 3 1 2 1 2 106

517.4 333.1 197.3 140.9 83.3 67.3 30.8 33.1 29.9 27.8 21.4 10.9 10.9 4.1 8.1 1,556.8

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

U.S. Initial Public Offerings: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

16

ADVISER

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

Citigroup/Salomon SB CSFB Merrill Lynch Morgan Stanley Deutsche Bank Goldman Sachs UBS Warburg Lehman Brothers Bear Stearns Cazenove Jefferies US Bancorp J.P. Morga Chase Legg Mason ING INDUSTRY TOTAL

5,979.6 2,508.9 2,238.6 1,497.4 693.1 691.9 554.7 537.8 384.2 121.5 115.2 103.5 85.5 85.0 78.6 15,954.6

37.5 15.7 14.0 9.4 4.3 4.3 3.5 3.4 2.4 0.8 0.7 0.6 0.5 0.5 0.5 100.0

7 11 8 5 4 4 5 6 4 2 1 1 1 1 1 55

244.8 119.6 99.8 76.6 33.5 45.6 34.7 33.4 24.1 3.7 8.1 6.3 2.6 6.0 3.4 756.4

CAREER LIBRARY

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. Debt (Including MBS, ABS & Tax Munis): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch CSFB J.P. Morgan Chase Lehman Brothers Goldman Sachs UBS Warburg Morgan Stanley BofA Securities Deutsche Bank Bear Stearns ABN Amro Royal Bank of Scotland Countrywide Securities Wachovia INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

355.1 306.4 248.4 238.0 214.6 198.1 168.3 154.6 153.9 128.6 128.5 37.8 36.0 26.0 23.0 2,618.0

13.6 11.7 9.5 9.1 8.2 7.6 6.4 5.9 5.9 4.9 4.9 1.4 1.4 1.0 0.9 100.0

1,124 1,558 888 822 669 513 516 539 688 363 396 533 116 457 150 11,271

926.9 462.8 446.9 565.1 381.1 330.4 142.4 509.6 295.8 213.3 111.2 81.7 9.3 40.6 16.6 4,801.7

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

U.S. Debt (Including MBS, ABS & Tax Munis): RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB Merrill Lynch J.P. Morgan Chase CSFB Lehman Brothers Morgan Stanley UBS Warburg BofA Securities Goldman Sachs Deutsche Bank Bear Stearns Royal Bank of Scotland Countrywide Securities Bank One Wachovia INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

174.7 148.8 140.8 131.6 121.4 109.1 90.9 90.5 87.7 79.3 67.0 25.8 18.1 16.8 14.7 1,424.6

12.3 10.4 9.9 9.2 8.5 7.7 6.4 6.4 6.2 5.6 4.7 1.8 1.3 1.2 1.0 100.0

561 640 468 445 336 366 296 500 249 283 212 85 198 93 113 5,335

430.7 171.0 373.8 172.9 205.3 286.3 101.6 198.2 123.0 187.3 46.9 6.1 6.3 36.1 13.9 2,536.8

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CAREER LIBRARY

17

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. High Yield Debt: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

CSFB Citigroup/Salomon SB Goldman Sachs J.P. Morgan Chase BofA Securities Morgan Stanley Deutsche Bank Lehman Brothers Merrill Lynch UBS Warburg Bear Stearns Jeffereies Wachovia TD Securities CIBC World Markets INDUSTRY TOTAL

12,811.7 9,664.7 9,312.8 8,069.9 7,363.0 6,014.6 5,394.6 5,097.5 4,753.2 2,902.4 2,646.4 661.8 476.6 348.0 332.5 76,319.2

386,103.9 291,263.3 280,658.2 243,201.1 221,897.4 181,260.9 162,576.1 153,622.4 143,246.3 87,469.1 79,754.1 19,944.5 14,363.2 10,487.6 10,020.5 100.0

60 39 36 48 345 18 31 25 22 18 17 5 4 3 3 261

62.3 86.4 34.6 23.6 43.9 63.5 14.1 22.7 38.6 8.4 10.7 0.0 0.0 0.0 5.3 414.7

ADVISER

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

CSFB Citigroup/Salomon SB BofA Securities Deutsche Bank Lehman Brothers J.P. Morgan Chase Goldman Sachs UBS Warburg Morgan Stanaley Merrill Lynch Bear Stearns CIBC World Markets Dresdner KW Wachovia Jefferies INDUSTRY TOTAL

7,003.7 4,342.3 3,767.7 3,609.3 3,523.1 3,507.4 3,158.9 2,400.7 2,297.0 986.4 887.0 531.4 519.8 505.6 335.3 38,641.4

18.1 11.2 9.8 9.3 9.1 9.1 8.2 6.2 5.9 2.6 2.3 1.4 1.3 1.3 0.9 100

46 26 26 22 18 24 9 14 12 6 9 6 4 6 2 164

15.5 29.7 2.9 8.3 41.3 17.9 17.5 2.5 5.4 0.0 4.3 2.0 2.1 0.0 0.4 163.5

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

U.S. High Yield Debt: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

18

CAREER LIBRARY

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. Investment Grade Debt: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB J.P. Morgan Chase Lehman Brothers Merrill Lynch Morgan Stanley CSFB Goldman Sachs BofA Securities UBS Warburg Deutsche Bank Bear Stearns Bnak One Barclays Capital ABN Amro BNP Paribas INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

140.1 94.2 66.0 59.6 5.8 51.1 46.6 43.6 20.1 16.3 12.2 7.0 5.5 3.6 3.0 638.5

21.9 14.8 10.3 9.3 0.9 8.0 7.3 6.8 3.1 2.6 1.9 1.1 0.9 0.6 0.5 100.0

321 286 164 206 129 138 111 148 66 50 35 36 21 23 6 1,189

657.8 383.9 219.2 287.9 297.3 255.3 212.7 199.6 82.4 64.4 50.3 23.8 21.3 12.5 13.9 2,825.1

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

78.4 59.9 39.5 32.1 31.4 25.9 23.5 20.3 11.6 9.7 5.2 4.0 3.6 3.1 1.9 357.7

21.9 16.7 11.0 9.0 8.8 7.2 6.6 5.7 3.2 2.7 1.4 1.1 1.0 0.9 0.5 100.0

242 227 97 292 73 112 80 70 44 38 28 21 23 11 182 1,059

323.6 252.4 118.6 168.9 183.3 99.7 104.7 73.5 47.3 62.7 20.6 18.8 9.8 9.7 26.4 1,552.3

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

U.S. Investment Grade Debt: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB J.P. Morgan Chase Lehman Brothers BofA Securities Morgan Stanley Merril Lynch CSFB Deutsche Bank Goldman Sachs UBS Warburg Bank One Barclays Capital Wachovia Bear Stearns In Capital INDUSTRY TOTAL

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CAREER LIBRARY

19

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

All Municipal Bond Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Salomon Smith Barney UBS PaineWebber Merrill Lynch Morgan Stanley Bear Stearns Goldman Sachs Lehman Brothers J.P. Morgan Securities BofA Securities Piper Jaffray A.G. Edwards RBC Dain Rauscher Morgan Keenan George K. Baum Bank One INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

39.6 33.6 19.6 19.1 17.5 16.5 16.3 10.0 6.4 6.3 6.2 5.7 5.1 4.4 3.4 283.5

14.0 11.8 6.9 6.8 6.2 5.8 5.7 3.5 2.3 2.2 2.2 2.0 1.8 1.5 1.2 100.0

111 62 108 119 107 73 67 44 54 47 36 22 18 8 11 13,235

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

23.5 23.5 11.6 11.5 11.5 9.4 8.4 5.5 4.3 3.3 3.1 3.0 2.9 2.7 1.8 160.8

14.6 14.6 7.2 7.2 7.2 5.8 5.2 3.4 2.7 2.0 2.0 1.9 1.8 1.7 1.1 100.0

330 446 85 133 136 91 184 85 276 147 272 143 68 228 69 6,555

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

All Municipal Bond Issues: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

20

ADVISER Salomon Smith Barney UBS PaineWebber Bear Stearns Lehman Brothers Merrill Lynch Goldman Sachs Morgan Stanley J.P. Morgan Securities RBC Dain Rauscher BofA Securities Piper Jaffray RBC Dain Rauscher Morgan Keenan George K. Baum Bank One INDUSTRY TOTAL

CAREER LIBRARY

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. Asset-Backed Securities: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER Citigroup/Salomon SB CSFB J.P. Morgan Chase Deutsche Bank Lehman Brothers BofA Securities Bear Stearns Morgan Stanley Merill Lynch Wachovia Royal Bank of Scotland Bnak One Countrywide Securities Goldman Sachs UBS Warburg INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

49.2 48.8 43.4 34.6 30.7 23.5 20.5 17.8 15.4 13.2 12.1 10.2 8.6 6.9 3.3 349.1

1,440.6 1,427.8 1,270.6 1,013.0 897.2 687.6 599.9 521.9 451.7 387.6 355.1 297.5 252.2 202.6 97.1 100.0

88 130 70 77 82 59 55 48 46 37 30 25 19 23 19 785

91.2 72.7 64.0 78.7 60.9 44.5 8.5 35.2 19.0 5.1 5.0 17.5 9.6 6.4 2.8 529.6

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

27.6 25.3 24.6 24.0 23.7 16.3 16.0 10.6 8.9 8.8 8.7 7.9 6.0 4.7 3.1 223.1

12.4 11.3 11.0 10.7 10.6 7.3 7.2 4.7 4.0 4.0 3.9 3.6 2.7 2.1 1.4 100.0

41 76 49 47 46 38 54 34 13 23 16 17 21 12 5 453

37.9 23.0 24.0 55.5 26.6 6.4 23.7 4.9 15.2 15.0 14.5 1.8 3.0 1.7 3.4 260.7

Source: Thomson Financial

Jan 1, 2001 – December 31, 2001

U.S. Asset-Backed Securities: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER J.P. Morgan Chase CSFB BofA Securities Deutsche Bank Citigroup/Salomon SB Morgan Stanley Lehman Brothers Bear Stearns Merill Lynch Wachovia Royal Bank of Scotland Bnak One Countrywide Securities Goldman Sachs UBS Warburg INDUSTRY TOTAL

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CAREER LIBRARY

21

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

U.S. Mortgage-Backed Securities: Jan 1, 2001 – December 31, 2001

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

ADVISER UBS Warburg Goldman Sachs Bear Stearns CSFB Lehman Brothers Citigroup/Salomon SB BofA Securities Royal Bank of Scotland J.P. Morgan Chase Merrill Lynch Countrywide Securities Morgan Stanley Deutsche Bank Securities Sales & Trading Wachovia INDUSTRY TOTAL

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

86.1 82.3 72.5 67.1 61.5 58.1 36.7 21.7 20.8 19.6 8.7 8.0 6.2 5.3 3.4 586.1

14.7 14.0 12.4 11.4 10.5 9.9 6.3 3.7 3.6 3.3 1.5 1.4 1.1 0.9 0.6 100.0

111 62 108 119 107 73 67 44 54 47 36 22 18 8 11 838

DISCLOSED FEES ($MILLIONS) 0.0 0.0 1.3 0.0 1.5 0.0 0.9 1.8 0.0 0.5 0.6 3.2 11.8 0.0 0.0 21.5

Source: Thomson Financial

RANK

U.S. Mortgage-Backed Securities: RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

22

ADVISER UBS Warburg CSFB Bear Stearns Lehman Brothers Goldman Sachs Citigroup/Salomon SB BofA Securities Royal Bank of Scotland Merrill Lynch J.P. Morgan Chase Countrywide Securities Securities Sales & Trading Morgan Stanley Nomura Deutsche Bank INDUSTRY TOTAL

CAREER LIBRARY

PROCEEDS ($BILLIONS)

MARKET SHARE (%)

# OF ISSUES

DISCLOSED FEES ($MILLIONS)

52.4 45.7 39.6 38.3 36.1 25.5 19.0 18.6 15.0 13.6 6.5 4.1 3.1 2.7 2.4 330.2

15.9 13.8 12.0 11.6 10.9 7.7 5.8 5.6 4.5 4.1 2.0 1.3 0.9 0.8 0.7 100.0

47 62 66 70 39 31 37 28 28 26 35 5 9 8 9 470

0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.6

© 2002 Vault Inc.

Source: Thomson Financial

Jan 1, 2002 – Jun 30, 2002

Bear Stearns The Scoop

Compensation Pay Analyst: 1st year: $55,000 (annual salary) + $9,000 signing bonus + $25,000 to $35,000 year-end bonus Associate: 1st year: $80,000 (annual salary) + $25,000 signing bonus + $30,000 bonus after the first six months

Perks • 3 weeks vacation for associate level and up (less time for more junior employees) • Free tickets to sporting and cultural events • Free meals • Travel opportunities

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CAREER LIBRARY

23

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Bear Stearns

Organization CEO’s Bio In addition to his skills as a manager, CEO James Cayne is quite a golfer and card player. A few years ago, Golf Digest ranked Cayne 34th on its list of the top 110 CEO golfers. At the time, Cayne had a 12 handicap. More impressive, Cayne has won 13 U.S. championships in bridge. He’s considered such an expert in the card game that he currently co-pens a column on the subject for the daily New York Sun. The 68 year-old Cayne, who never went to college (yeah, that’s right), began his career as a scrap metal salesman in Chicago. But in 1969 former Bear chairman Alan “Ace” Greenberg, also a formidable bridge player, hired Cayne at Bear Stearns. During the following two decades, Cayne stayed loyal to Greenberg, remaining at Bear while many stars in the industry jumped from firm to firm for big paydays. Cayne’s loyalty paid off. When Bear went public in 1993, Cayne was tapped to become the firm’s president and CEO. And less than 10 years later, in June 2001, when a 73 year-old Greenberg decided to step down as Bear’s chairman board (and fully relinquish control of the daily operations of the bank), he named James Cayne as his successor. Because Cayne and Greenberg are such close friends – they play bridge together and even carpool to work from their homes on Manhattan’s Upper East Side – it’s a good bet that the transition from a Bear run by “Ace” to a Bear run by Cayne will be a smooth one.

Business Units Bear Stearns divides its operations into three major segments: Capital Markets, Wealth Management and Global Clearing Services. Additionally, the firm makes markets for clients in derivatives such as swaps, options and exotic options on a wide range of securities’ sectors, including fixed income, equity, credit, mortgage, tax-exempt and foreign exchange.

Capital Markets Investment Banking Bear Stearns offers M&A advisory services and capital raising abilities. The firm’s I-banking arm includes divisions dedicated to capital markets, corporate finance, financial restructuring, M&A and public finance. Industry Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

CAREER LIBRARY

25

Bear Stearns Organization

focus groups include: consumer, financial buyers and institutions, health care, industrial products, media, natural resources, real estate, gaming lodging and leisure, technology and telecommunications. Institutional Equities Bear Stearns makes markets in 50 equity markets, and consistently represents about 10 percent of the volume on the New York Stock Exchange and 30 percent of the short-selling activity. In research, the firm claims it covers approximately 1,250 companies in 100 industries. Fixed Income The firm offers liquidity for investors and distribution power for issuers in fixed income markets, with one of the largest sales and trading staffs in the industry.

Wealth Management Private Client Services This group works with small institutions and wealthy individuals. Bear has about 450 account executives in the U.S. and Hong Kong, who are hard at work building long-term relationships with their high net-worth clients. Asset Management Asset management includes portfolio management and mutual funds. The firm had more than $24 billion in assets under management as of November 2001. The unit provides asset management services to corporations, governments, multi-employer plans, foundations, endowments, family groups and high-net-worth individuals.

Global Clearing Services Bear’s correspondent clearing services (processing stock transactions, including handling bookkeeping matters for brokerages) fall under a subsidiary called Bear, Stearns Securities Corp (BSSC). Serving more than 2,900 clients, including hedge funds and clients of money managers, short sellers, arbitrageurs and other professional investor, the firm processes about 10 percent of the volume cleared on the New York Stock Exchange and clears securities in 73 countries.

26

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Bear Stearns Organization

Locations Domestic • New York, NY (HQ) • Atlanta, GA • Boston, MA • Chicago, IL • Dallas, TX • Los Angeles, CA • San Francisco, CA

International • Beijing, China • Buenos Aires, Argentina • Dublin, Ireland • Hong Kong • London, United Kingdom • Lugano, Switzerland • Puerto Rico • Sao Paulo, Brazil • Shanghai, China • Singapore • Tokyo, Japan

Key Officers Chairman and CEO: James E. Cayne Vice Chairman: E. John Rosenwald Jr. Vice Chairman: Michael L. Tarnopol Chairman of the Executive Committee: Alan “Ace” Greenberg President and Co-Chief Operating Officer: Alan D. Schwartz President and Co-Chief Operating Officer: Warren J. Spector

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Chief Financial Officer and Senior Vice President, Finance: Samuel L. Molinaro, Jr. Executive Vice President and General Counsel: Mark E. Lehman Treasurer: Michael Minikes

Ownership Employees own approximately 40 percent of the common stock of Bear Stearns, which is traded publicly on the New York Stock Exchange under the symbol BSC.

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Vault Newswire June 2002: Casual clothes a boon for Bear Bear Stearns reported that net income more than doubled in the second quarter, thanks in large part to its work on clothing retailer Aeropostale’s IPO and the strength of Bear’s fixed income unit. Bear booked net income of $343 million for the period ended May 31, compared with $170 million a year earlier. Net revenue at its capital-markets division, which includes its institutional-equities, fixed-income and investment-banking operations, increased 30 percent to $1.3 billion.

March 2002: First quarter score Bear Stearns reported first quarter 2002 net income of $181 million, up from $160 million during the same period a year earlier. Bear’s bond trading increased 61 percent, and net investment banking revenue rose 18 percent. However, Bear’s institutional equities, global clearing services and wealth management business all were down from a year earlier.

February 2002: Writing’s on the wall for Bear’s invisible ink woman A former secretary at Bear Stearns pleaded guilty to charges of using disappearing ink to swindle her boss out of over $800,000. Anamarie Giambrone, 34 years old, of Queens, N.Y., used fast-fading ink to write checks that her manager, Eli Wachtel, a senior managing director at Bear Stearns, had requested. After Wachtel signed the checks, she would erase the name of the payee and rewrite the checks for cash. Giambrone faces a sentence of two to six years in prison.

January 2002: Bear lose its appeal A federal judge rejected Bear Stearns’ appeal of a previous decision ordering the firm to pay $1 million in punitive damages to two customers of nowdefunct A.R. Baron, which closed its doors in 1996 after it was accused of cheating investors out of $75 million. In August 2001, an arbitration panel said Bear Stearns was “aware of Baron fraud and took numerous actions to involve itself in Baron’s business and financial affairs and assist Baron, above and beyond those involved in a normal back-office clearing operation.”

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January 2002: Bear’s top ten hits Bear Stearns ranked atop several 2001 underwriting league tables, including mortgage-backed securities (No. 3), municipal bond issues (No. 5) and assetbacked securities (No. 7). On the 2001 U.S. M&A league table, Bear took the number 10 spot.

December 2001: New tech blood Barry Newman joined Bear Stearns as a senior managing director and vice chairman of its technology investment-banking group. Newman had worked in the tech group at Banc of America Securities until that firm reshuffled its tech group in March 2001.

December 2001: Better luck next year, says Cayne For the fiscal year ended November 30, Bear reported net income $619 million, down 20 percent, and net revenues of $5 billion, off 10 percent. Despite the less than stellar year, Bear CEO James E. Cayne said the firm is optimistic it can build upon “some key transactions during the fourth quarter and the momentum generated over the past weeks and months.” He specifically noted the prowess of Bear’s fixed income businesses, which, he said, “continued to perform well with record revenues for the year in our mortgage-backed and municipal areas.”

November 2001: Bear’s new economist Wayne Angell, chief economist at Bear Stearns since 1994, announced his departure at the end of 2001. Bear Stearns named two economic veterans to take his place; David Malpass was named chief global economist while John Ryding was named chief market economist. Malpass held a number of posts in the Ronald Reagan and George H.W. Bush administrations while Ryding was a senior economist at the Federal Reserve Bank of New York before joining Bear.

October 2001: Cutting the Bear down in size Bear Stearns announced that it would cut 830 jobs, or 7.5 percent of its staff, in the largest downsizing in the firm’s history. About 40 percent of the layoffs would come from the investment banking and capital markets units and 60 percent would come from administrative and information technology departments. Additionally, according to an internal memo from Bear CEO 30

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James Cayne, the firm’s top executives, including Cayne, would be taking approximately 50 percent cuts in pay.

June 2001: Bear loses its Ace After 52 years with the company, Alan “Ace” Greenberg, chairman of Bear Stearns, announced his resignation. While Greenberg remains chairman of the executive committee, all his responsibilities were handed over to CEO Jimmy Cayne.

April 2001: Swallowing a specialist Bear Stearns acquired Wagner Stott Mercator, said to be the fifth-largest specialist firm on the Big Board. Wagner Stott manages trades for specific stocks, as well as for certain firms, including Bear competitors Citibank and Merrill Lynch.

July 2000: Bear will sell, if the price is right A report written by a Salomon Smith Barney analyst revealed that Bear Stearns’ CEO James Cayne said his firm would sell to the right partner at the right price – almost three times the share price.

December 1999: Bear changes fiscal year end from June 30 to November 30 In an effort to keep its employees from strolling off to other banks after being paid in August, Bear Stearns has changed its year end to November 30, which is the year-end date of many of Bear’s competitors. In further efforts to retain talent, Bear is investigating various options for incentive pay.

October 1999: Bear Stearns markets private equity fund to outside investors Through its private equity arm, Bear Stearns Merchant Banking, Bear is marketing a limited partnership which targets approximately $1-$1.5 billion in capital.

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July 1999: Bear reports record earnings for fiscal 1999 year Bear Stearns has reported record earnings for its most recent fiscal year. Net income for 1999 totaled $673 million, an increase from $660.4 million in 1998. Revenue for the year was $7.88 billion, a slight drop from the record $7.98 billion posted in 1997. For the fourth quarter, the firm reported record figures in I-banking, with $324.9 million in revenue. And the firm’s return on equity – a widely used measure of profitability – was an eye-popping 29 percent for the fourth quarter, which was one of the highest marks on Wall Street.

January 1999: SEC official joining Bear Stearns In a move that Street watchers believe is designed to improve the image of Bear Stearns’ beleaguered clearing operation, Bear Stearns has hired a senior executive from the Securities and Exchange Commission. Richard Lindsey, the SEC’s director of market regulation, will join Bear as the number two person in charge of the subsidiary that runs the firm’s clearing operations. Bear is under investigation for clearing (processing the trades of) a New York brokerage that defrauded its customers.

Select Recent Transactions • Bear Stearns was one of two banks that advised Pfizer on its $59.5 billion acquisition of Pharmacia. The big drug deal was announced in July 2002. • Bear Stearns lead managed a $500 million issue for TSAC Corp. in July 2002. • In July 2002, Bear Stearns lead managed a $160 million bond offering for Sacramento Municipal Utility. • In June 2002, Bear Stearns co-lead managed the $156 million IPO for Inveresk Research Group, a provider of drug development services. • Bear Stearns co-led medical equipment manufacturer CTI Molecular Imaging’s $182 million IPO in June 2002. • In June 2002, Bear, along with CS First Boston, co-lead managed the $210 million IPO for Pacer International, a provider of freight shipping and storing services.

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• Bear co-lead managed a $174 million offering for AmeriCredit in June 2002. • In May 2002, Bear Stearns co-lead managed, along with Merrill Lynch, Aeropostale’s $225 million IPO. (Bear’s investment in and work on the retailer’s IPO generated $260 million in net income, over half its total net income recorded in the second quarter 2002. • Bear Stearns led a $1.7 billion municipal issue for Badger Tobacco Asset in April 2002 • In April 2002, Bear Stearns lead managed a $516 million municipal issue for New York State Environmental. • In April 2002, Bear Stearns, along with UBS Warburg, co-lead managed a $275 million bond offering for Hollywood Entertainment. • Bear, with Royal Bank of Canada, co-lead managed a $200 million bond offering for Western Financial Bank in April 2002. • Bear Stearns lead managed a $275 million municipal bond offering for Commonwealth of Massachusetts in April 2002. • Bear Stearns, with Morgan Stanley, co-lead managed the $100 million March 2002 IPO for Med Source, a provider of engineering & manufacturing services to the medical device industry. • In January 2002, Bear lead managed Synaptics’ $55 million IPO. Synaptics develops and designs products and services that allow people to interact with mobile computing devices. • Bear Stearns lead managed a $250 municipal bond deal for Syre Boro, Penn., in January 2002. • In January 2002, Bear led a $150 million municipal bond issue for Broward County, Fla. • Bear Stearns co-lead managed, with Merrill Lynch, Alliance Data Systems’ $156 million IPO in June 2001. • Bear led UTI Worldwide’s $71 million IPO in November 2000. UTI is warehousing and shipping company. • In October 2000, Bear Stearns led an $80 million IPO for Informax, a provider of bioinformatic software solutions.

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• In August 2000, Bear lead-managed a $75 million IPO for 3-Dimensional Pharmaceuticals. • Bear Stearns co-managed AT&T Wireless’ $10.6 billion IPO in April 2000. • Bear advised Time Warner on its $180 billion merger with America Online, announced January 2000. • Bear Stearns represented Honeywell Inc. in its $14 billion merger with AlliedSignal that closed in November 1999. • Bear Stearns lead-manages the IPO for the World Wrestling Federation in October 1999. The offering raised $170 million. • Bear Stearns managed the IPO for online investment bank Wit Capital Group. The offering yielded approximately $68 million in June 1999. • Bear lead-managed the IPO of Xoom.com in December 1998, raising $56 million for the company. • Bear lead-managed the $168 million Prodigy Communications IPO in February 1999. • Bear Stearns served as global coordinator for a mammoth $8.6 billion bond for Ford Motor Credit that was sold in July 1999. • Bear Stearns lead-managed a $1.5 billion bond offering by Wells Fargo in August 1999.

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Our Survey Says Culture-bust Insiders at Bear Stearns praise the firm as being “entrepreneurial” and “aggressive,” though they concede the culture has its less appealing aspects. Sources say the firm offers “so much responsibility that it automatically becomes a rewarding experience.” “You’re going to a firm that’s large and has its fair share of marquee deals, but you’re not going to a factory,” reports another insider. One source called the firm “flat,” which enables everyone “to make an impact on every level.” That autonomy does have its price. “The every-man-for-himself culture and the lack of honesty and fair-mindedness I see in the management outweigh, for me, the early responsibility and challenging, interesting work I have received,” rails one insider. “Little effort is made to cultivate junior pros or to instill loyalty in the right kind of people. In short, the culture is broken.” Because “there’s very little structure, you have to find your own way” at Bear Stearns. Says one source: “Every place says they’re entrepreneurial – this place is entrepreneurial.” The firm also allows for “individual stars to shine.” Because of Bear Stearns’ “thorough commitment to recognizing individual merit, those who perform well can really hold their heads up high.” One junior banker explains, “There’s an openness here to new ideas. If I do something unique, it’s going to get noticed and appreciated.”

Sink or swim? While insiders note the lack of handholding that might be present at some other firms, at least one Bear employee says everyone has “the chance to become a star player for the firm.” Some employees say the firm has a “survival of the fittest” mentality that “extends into all ranks.” Bear is “very much a cowboy culture,” continues another source. “[There’s] lots of whooping and hollering emanating from the trading floor. A colleague put it best: ‘Every man is his own corporation, with his own bottom line.’” Bear employees are quick to point out that the firm is not a completely sinkor-swim environment, saying that they are provided support from senior employees. “Bear people are, above all else, individuals, and the culture not only accepts but applauds this.” Still, the firm makes an effort to encourage teamwork. I-banking associates are assigned a junior and a senior mentor (a VP as the junior mentor and an MD as the senior mentor). There are those who downplay the competitive culture. “The bottom line is to make money,” Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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says one associate. “If all that they say about back stabbing and sink-or-swim were true, how the hell would we make any money?” “From a junior banker’s perspective, the culture encourages development and rewards those who excel,” brags another insider. “It truly is a meritocracy.”

Associates, stick to your mentor Speaking of senior bankers, Bear insiders give their superiors mixed reviews. “Success at Bear Stearns depends partly on good results and partly on patronage,” says one source. “There is no formal evaluation process and no institutional method to ensure objective feedback. It is thus crucial to find a good patron to help your career along.” Once you find that patron, never let him/her go. “My senior bankers have taken a true interest in my development; I feel that I can sit down in any of their offices at any time and be welcomed. They personally push me to the limits of my ability and are genuinely thankful for the work that I do for them.” You’ll rarely get stuck doing menial work. “Once in a while you’ve got to suck it up and work on that random annoying pitchbook that you just don’t want to do but the vast majority of the time, work assignments are appropriately assigned to analysts based on their prior experiences and abilities.” Whatever you get from your seniors, don’t expect a great deal of formal training. “Come to Bear Stearns already knowing the job you are to do,” warns one insider. “Otherwise it will be very difficult. Training simply is not a priority at this firm.” Those outside the firm’s New York headquarters report that some formal instruction is “offered over video conference.”

No paper clips for you The Bear Stearns support staff has been described by employees as “the best available.” Unlike at other Wall Street firms, there are plenty of secretaries to go around, though some offices may have a limited number depending upon their needs. Word processing and data entry services are also available and interns are plentiful and available for all research needs. However, several employees confirm that “the firm does emphasize thrift.” One banker, speaking about the dearth of supplies, says, “No joke, if I see a paper clip on the floor or a pen on somebody’s desk – if somebody’s stupid enough to leave a pen on their desk – I take it.”

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Well known and worth it “You have to love the prestige,” employees say. “This firm only hires the best and brightest – and you’re recognized for it.” “For me, I knew it was a very good emerging firm,” explains one associate about why he chose the firm over some of its competitors. Like most employees on Wall Street, Bear Stearns employees can expect to spend most of their waking hours at the firm. “Perhaps the worst part of the job,” employees say, “is the hours.” One employee says that “the number and variability of hours can ultimately make this job undoable.” Comments one I-banking associate, who figures Bear’s hours are par for the course: “Sometimes it’s 50 hours a week, sometimes it’s over 100. Although sales and trading employees have more reasonable hours than their I-banking brethren, that doesn’t mean that they have it easy either. “I come in most Sundays,” says one salesperson. “And I just read.” And, like most employees at investment banks, Bear employees simply accept the long hours as part of the deal. Reports one I-banking analyst: “It’s tough when you’re working 90 hours a week. Your body just can’t take it – but the compensation’s worth it.” One source says Bear has “always paid well compared to the rest of the Street.” Another employee agrees, adding, “Your salary may be a bit low [at Bear], but the majority of your compensation comes from bonuses anyway.” Because bonuses are “based on merit,” another comments, “many people are hush, hush about [them].” Like their sales and trading associates at other banks, Bear sell-siders receive free tickets to take their clients out. I-bankers receive a $20 stipend for evening meals, and get free car service home.

Typical diversity (and that’s not stellar) Bear Stearns has room for improvement in the area of diversity. While “Bear could use some help [with diversity],” one employee defends, “the firm does not have any issues that aren’t typical for Wall Street or the financial services industry.” As far as gender diversity is concerned, one female analyst reports: “There are a lot of female analysts. There are not that many associates.” Says a female associate, “There are some firms that aggressively go out and recruit women. We’re not like that, we simply go out and recruit the best people we can get. I have never, ever had an issue here about being a woman at this firm.” “In terms of [ethnic] minorities, we need more,” says one minority contact. “I think it’s a little hard for Bear Stearns, because we’re not Goldman or Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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Merrill. They’re actively trying to [recruit minorities]. They’re recruiting at Howard and Morehouse and Spelman, but it’s just they’re competing for all the same kids, and Bear just doesn’t have the name.” However, says that employee: “There’s not a problem as far as opportunity is concerned. I think that here, if you do your time and go above and beyond, I don’t think being a minority matters.”

Can I have a cubicle? Please? Bear’s offices are located on the south end of Park Avenue, near the Helmsley building. The firm’s I-banking offices are located on four floors; the firm also has two trading floors . Oddly, Bear Stearns employees actually aspire to get their own cubicle. The building is “not as decked out as the older Wall Street firms,” said one contact, “but it serves its purpose.” Always expanding, the firm “is constantly outgrowing its digs.” The firm is currently building a new world headquarters near its current location.

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Getting Hired Hiring Process No worries if you’re off target For investment banking, the firm targets approximately 12 business schools. At these schools, either the co-head of investment banking or another highranking official makes a presentation. At about five other business schools, the firm interviews but does not give presentations. Don’t worry if your school is not targeted. The firm conducts “in-house interviews for those who write in” from out-of-the-way schools. Another note: Bear doesn’t want resumes clogging up their mailroom and e-mail inboxes. A message on the firm’s web site, www.bearstearns.com, instructs applicants to submit their resumes through Bear’s online application process. At Bear’s target schools, interested parties can arrange a Bear interview through the career services office.

Hot jobs Bear Stearns draws many of its associates from its summer programs. The summer hiring process is condensed into a three-week period. The first round is usually an on-campus, two-on-one interview. While students at some schools will travel to Bear’s New York headquarters for second rounds, many will simply interview again that evening on-campus. (For example, since the University of Chicago business school does not excuse time off from classes to travel for interviews, Bear conducts both first and second rounds on campus.) The final round in New York is described as “the typical super day format with analyst-level candidates meeting mostly with associate and VPlevel bankers and associate candidates meeting mostly with VP and managing director/senior managing director-level people.” That source also reports that “one of the two co-heads of investment banking generally interviews every associate candidate.” The firm also generally targets about 40 undergraduate schools each year. It hires about 100 analysts into I-banking worldwide, and about 75 of them work in New York. Although Bear accepts resumes from all undergraduate schools, for summer analyst positions Bear likes to have representation from its core schools – the firm only recruits on campus for summer analysts at Wharton, Dartmouth, Michigan and the University of Virginia.

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Bear Stearns Getting Hired

Interview questions: easy on the left brain Insiders say not to look for technical questions. “There is a uniqueness to our culture and we look for people who can both enhance it and excel in it,” says one source. “We stay away from the brain teaser questions.” Another contact concurs, saying Bear asks “the typical banker questions. ‘Why banking,’ ‘why you’ and ‘why you with Bear?’ Some technical questions for undergrad students with a business degree and MBAs but nothing out of the ordinary – [it] all depends on the interviewer.”

Buying and selling spots The firm doesn’t recruit undergrads for sales and trading, although those with BAs who complete the firm’s operations training program can go into sales and trading. For associates in sales, trading, research and public finance, the firm recruits on campus at 10 business schools – NYU, Columbia, Harvard, Wharton, Chicago, Kellogg, Stanford, UCLA, Fuqua and Darden. Says a recruiter, “We do very well with Columbia, NYU and Chicago; those are our three best.” Associates are hired into one of four departments: fixed income, equity, research or public finance. Candidates in these areas can expect oneon-one interviews, with probably two rounds. “For a full-time hire, you have to have six interviews,” according to one insider. Summer hires generally go through an on-campus round and then one callback. About 50 to 75 percent of the sales trading, and public finance associate class is hired through the summer program. In these departments, the firm hires about 20 to 25 summer associates and about 20 full-time associates. All fixed-income hires complete 12 weeks of rotations, covering six different desks, and are placed after that; the equity division hires students for both specific slots and as generalists. All research positions are hired on an asneeded basis.

Being There On-campus college and business school recruiting is the norm. First interviews are typically on campus. The second round varies; some are on campus, others on-site, depending on the particular candidate. Two to three weeks later, the firm calls back its selections for the final screening process. Candidates are flown out to a Bear Stearns office, most likely a New York location, at the firm’s expense. Candidates typically meet with at least six people. Be ready for post-offer, pre-employment drug tests.

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Questions to Expect 1. Why Bear Stearns? At Bear and other firms just outside the inner circle of investment banking giants, contacts stress that candidates must be able to state clearly why they are interviewing with the firm. The firm sells itself on the opportunities for early responsibility and advancement in a growing franchise, and you’d do well to emphasize this as a candidate. 2. Describe a leadership experience. When trying to prove your fit in an entrepreneurial and more individualistic environment such as Bear, you need to emphasize your strengths as a selfstarter and leader – the firm is looking for a willingness to take on responsibility. Still, interviewers are not necessarily looking for the old “born leader” model – “teamwork” is a key buzzword on Wall Street, and you need to be able to showcase your ability to work in a team setting. 3. If someone gave you a hundred dollars a year for the rest of your life, how much would you pay him today for that cash stream? Even though Bear Stearns says it considers people of all backgrounds for analyst positions, it wants people who are able to deal with analytical problems. 4. Describe how you have matured during college. “No more partying on Wednesday night,” laughs one interviewee. 5. How can we be sure that you are willing to work long hours? All investment banking requires long hours, and you had better be ready to deliver. Discuss how you worked long hours in a previous job, summer internship, or on schoolwork. 6. Discuss the item on your resume that’s most important to you. Pick something that your interviewer might otherwise not notice. And highlight something that shows entrepreneurial and self-starting strengths. 7. How do you value a company? One recent interviewee with Bear reports that his interviews were “less technical than I expected,” but still featured this oldie but goodie. There are various methods of valuing companies, including taking multiples of financial figures (such as the P/E ratio), comparing the company to similar ones, and doing a discounted cash flow analysis. This last method is the most rigorous technique. To do it, you discount the company’s projected cash flows by a “risk-adjusted discount rate.” After projecting the first five or 10 years, you add in a “Terminal Value,” which represents the present value of Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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all the future cash flows that are too far into the future to project. You can calculate the Terminal Value in one of two ways: (1) you take the earnings of the last year you projected, say year 10, and multiply it by some market multiple like 20 times earnings, and that’s the terminal value; or (2) you take the last year, say year 10, and assume some constant growth rate after that like 10 percent – the present value of this growing stream of payments after year 10 is the Terminal Value.

Questions to Ask 1. How much responsibility can I expect early on? Remember, Bear stresses that its employees can expect early responsibility when compared to behemoths such as Merrill Lynch. Express your eagerness to take this on. 2. What does the firm see as its position in an industry that is rapidly consolidating? Bear has grown slowly for decades and, unlike many of its competitors, doesn’t seem to be in a rush to add new businesses or expand. Asking this question shows that you are knowledgeable about the firm’s position in the industry. 3. What distinguishes Bear Stearns from its competitors? 4. How would you describe the firm’s corporate culture? The firm has a strong corporate culture (which was established, in large part, by former chairman “Ace” Greenberg). Show that you know it, and ask leading questions.

To Apply If Bear Stearns does not recruit on your campus, or if you are an experienced professional, you must apply online via the career section of Bear Stearns’s web site, which reads, “Please be aware that we are not accepting hard copy resumes sent in the mail for the foreseeable future. If you are interested in applying for a position, please submit your resume though our on-line application process.”

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On the Job Job Descriptions Investment Banking Associate Investment Banking associates work on several projects simultaneously, including capital raising, typically high yield bonds and common stock. Associates perform quantitative analysis and prepare pitchbooks and presentations. An associate often serves as the firm’s contact person between internal and external members of deal teams. For example, says one Bear Ibanking associate, client contact usually involves “the CFO, the controller, or senior finance officials.” At meetings – which can be either via teleconference or in person – with clients and related firms (like law firms working on the deal), associates are often asked to explain and give input on parts of deals on which they have worked. However, as one I-banking associate explains, at “pitch” meetings in which the firm is trying to win business, senior bankers generally do most of the talking and presenting. Expect frequent travel as an I-banking associate -sometimes up to twice a week, though typically not that much. The amount of work ebbs and flows with the market. Said one I-banking associate in the fall of 1998: “I’m working on one live M&A transaction primarily, although I have a couple of projects. Last year at this time, I would have had a lot more [because of the active market].” I-banking associates begin with a six-week training program (although insiders note that the length of the program alters somewhat from year to year). The training includes one week of Series 7 training; two weeks of classroom training (which is like “B-school review”); one week of modeling (described by associates as the “most extensive on the Street”); and one week of “how the place really works, how to get a deal done – it’s like Bear 101.” “Then the last couple days it’s meet the groups.” Oh, and there’s a “golf outing at Essex County (NJ) Country Club.”

Investment Banking Analyst The I-banking analyst position begins with a four-week training program. That means financial analysis, financial analysis, and more financial analysis. Consider yourself the essential hub of transactions and other deals. Analysts coordinate information from related parties and make sure necessary administrative duties are completed in a timely fashion. Job responsibilities Visit the Vault Finance Career Channel at http://finance.vault.com — with insider firm profiles, message boards, the Vault Finance Job Board and more.

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as an I-banking analyst progress rapidly. Explains one second-year analyst: “They trust you more. I don’t have to do the bullshit pitchbook work that you do as a first-year. I do more of the [financial] modeling, document drafting, and they take me to a lot more of the meetings.” What is the “bullshit” work on pitchbooks that first-years start with? “You put together graphs, do some research on companies.” For first-year analysts, the summer can be an especially brutal time, because the second-year class leaves in May, and the incoming class of analysts do not arrive until August. I-banking analysts start with a four-week training period, which includes “one week of accounting, one week of finance, one week of modeling, and one week of database and Bloomberg stuff.” For the accounting and finance weeks, the firm brings in professors from New York University. Because of space considerations, much of the firm’s training is held off-site in New York. And of course, there are the requisite social activities during the training period. “There’s maybe an event every week,” says one analyst. “We go bowling, go play pool, go to bars. It’s run by human resources and the second-years are invited.”

Sales, Trading and Research Associates Sales, trading and research associates work together to move financial products, either equity (stock) or fixed income products. Like I-banking associates, these associates begin with a six-week training program, much of it with their I-banking counterparts. The associates devote two weeks to training for the Series 7 exams. Other fun topics include yield-curve analytics and derivatives. The training may help some, “but at the end of the day, when you hit the ground on the trading floor, it doesn’t really matter. You have no fucking idea what’s going on. You just have to listen and learn.” Incoming associates don’t officially join groups until January (after starting in August), but they usually have already become integral to a group’s operations. The associates are supposed to rotate every two weeks or so, but as one associate says: “Bear is a very flexible firm. If the powers-that-be know there’s money to be made through a situation, and you’re crucial to a rotation, then they’ll just go ahead and skip the rotation.”

MBA Summer Associate; Sales, Trading, and Research Summer associates in sales, trading and research are hired into either equity or fixed income, but through rotations can gain experience in either

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department. And unlike sell-side summer associates at other firms, Bear insiders say they get thrown into the pit: “You get involved so deep into the projects, it’s actually like, ‘By the way, thanks for the summer, and can you do this?’ I guess I could have switched groups, but I couldn’t just leave. People were depending on me. “Part of the summer experience in sales and trading includes question-and-answer sessions with group heads “about every three days.”

MBA Summer Associate, Investment Banking “What really makes for a good summer associate program is the staffing,” says one former Bear summer hire. “And the two VPs that run the staffing are very committed to making sure it’s a good experience.” One of the highlights of the summer are the dinners summer I-banking associates have with David Solomon and David Glaser, Bear’s co-heads of investment banking. “They take you out in groups of four or five. The objective isn’t to wine and dine you so much, but to make sure that there’s a noticeable and sincere commitment to making sure the experience is a good one.”

A Day in the Life Associate, Investment Banking 9:00 a.m.: Arrive at work. Check voice mail, return phone calls. 9:30a.m.: Eat breakfast at desk. Read The Wall Street Journal. 10:00a.m.: Get to work on preparing pitchbooks, discuss analysis with members of deal team. (“Right now, I’m working on a live transaction with an analyst, myself, a VP and an MD. That’s staffed up a little bit more than usual because it’s slow.”) 12:00 p.m.: Conference call with members of IPO team, including lawyers and client. 1:00 p.m.: Eat lunch at desk. 2:00 p.m.: Work on restructuring case studies; make several document requests from company library. 3:00 p.m.: Start to prepare analysis; ask analyst to gather data, do supporting analysis.

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Bear Stearns On the Job

5:00 p.m.: Check in with Vice Presidents/heads of deal teams on status of work. 7:45 p.m.: Dinner. (“We get $20 a night.”) 8:00 p.m.: Meet with VP again regarding status of project. 11:00 p.m.: Submit work to document processing with a morning deadline. 11:30 p.m.: Call car service and head home.

Associate, Sales, Fixed Income 6:45 a.m.: Get to work. (“I try to get in around 6:45. Sometimes it’s 7:00. ) 6:50 a.m.: After checking e-mail and voice mail, start looking over The Wall Street Journal (“I get most of my sales ideas from The Wall Street Journal. I’d say 70 to 75 percent of my ideas. I also read The Economist and BusinessWeek just for an overview, and some Barron’s and the Financial Times. Maybe three issues out of the five for the week for FT.”) 7:15 a.m.: Start checking Bloombergs, get warmed up, go over your ideas and figure out where things stand. 7:45 a.m.: Meet with your group in a conference room for a brief meeting to go over the day. (“We go over the traders’ axe [what the traders will focus on that day], go over research, what the market quotes are on a particular issue.”) 8:15 a.m.: Get back to desk, and get ready to start pitching ideas. 8:15 a.m.: Have a short meeting with your smaller group. 10:00 a.m.: One of your clients calls to ask about bonds from a particular company. You tell her you’ll get right back to her. Walk over to talk to an analyst who covers that company. 10:15 a.m.: Back on the horn with your client. (“I’m in contact a lot with my analyst. I listen to my analyst.”) 12:30 p.m.: Run out to lunch with another salesperson from your group. (“We often buy each other lunch. Sometimes to celebrate a big deal we’ll order in lunch. We go to Little Italy Pizza Place or Cosi. It’s always the same people, and it’s always the same six places.”) 1:00 p.m.: Back at your desk, check voice mail. (“If I leave for 30 minutes or so, when I get back, I’ll have five messages.”)

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Bear Stearns On the Job

2:00 p.m.: One of your clients wants to make a move. (“I trade something every day. Maybe anywhere from one to 10 trades. It’s on a rolling basis. You plant seeds, and maybe someday one of them grows into a trade.”) 3:15 p.m.: Another client calls and wants to place an order. 5:30 p.m.: Still on the phone. (“Although the markets close, that’s when you can really take the time to talk about where things are and why you think someone should do something.”) 7:30 p.m.: Head for home – you’re meeting a client for a late dinner. (“Often on Thursdays we go out as a group.”)

Career Path Undergrads Like most banks, Bear Stearns’ analyst program in I-banking typically lasts two years. The program starts with about four weeks of training, followed by a six-week generalist period (before this period, analysts are asked to rank three groups, and the firm makes an effort to ensure that the analysts get good exposure to those groups). After the six-week generalist period, the analysts re-submit their top three choices. “I would say 95 percent of people got their first choice,” says one analyst. Most analysts stay for two years before heading to business school. Some stay on for three years, “if it is a natural fit.” These analysts can switch groups and locations. A few outstanding analysts (two in a recent class) are promoted to the associate level without an MBA after their third year. Analysts who join on before heading off to business school “rarely come back,” say some employees. “Analysts have seen the worst and taken the most grief,” one says. “Everyone needs to let off steam, and analysts, being the low men on the totem pole, take a lot of abuse.” The firm does not pay for analysts to get MBAs although it does front for GMAT classes.

MBAs MBAs in investment banking start in a six-month generalist program. Bear contacts stress that this is not a “rotation” program but a “generalist” program, meaning that they can take work from any group at any time.

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Bear Stearns On the Job

I-banking MBAs generally spend three years as associates, three years as vice presidents (VPs), one year as associate directors (ADs), and then become managing directors (MDs). The next step up is senior managing director (SMD). The SMD level is a major step up from MD, and the promotion to that level is not very regimented. For those on the sales and trading (sell-side) of the Street, the career path is much less defined. As one Bear insider says: “If everybody leaves the desk, and you’re the only associate left, and you handle the products, obviously they’re going to move you up quickly.” In rare instances, for example, associates can move all the way to the assistant managing director in a year’s time. A roughly average career path would involve two years as an associate until vice president, one to two years as a VP, one to two years as an AD, and then anywhere from one to four years as an MD before moving up to senior managing director. The move to senior managing director is a major hump. “It’s like partnership,” explains one Bear employee.

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Final Analysis When the Bear roars, Wall Street listens – and for good reason. Bear Stearns is one of the most stable establishments in American finance. The firm has earned its fame through its legendary profitability, as well as its top-of-theline services. While not a top finisher in most equity and M&A league tables, Bear Stearns is still considered a major player. The firm’s fixed income group is also top-notch, especially its research unit. The Bear’s biggest asset, however, may be its clearing services, the best in the business. Bear has a commitment to a cost-cutting philosophy, a strategy not likely to be changed by the recent (amicable) departure of Chairman Alan Greenberg. Employees are encouraged to watch even the smallest expenditures and the firm insists on lean staffing. On the plus side, the firm’s miserly ways have mostly prevented the mass layoffs depressingly common at other investment banks recently.

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Bear Stearns

Recommended Reading Find out all about Bear’s history at www.bearstearns.com, which also has an annual report available for download, and reflections from the firm’s analysts. To learn more about “Ace” Greenburg’s management philosophy, as documented in his legendary internal memos, check out Memos from the Chairman, Greenberg’s 1996 book. Memos also includes a foreword by investing guru Warren Buffet, a Greenberg supporter and friend. We also recommend checking out the following articles: • “Bear Stearns’s Profit Doubles On Gain From Aeropostale IPO,” The Wall Street Journal, June 19, 2002. • “Bear Stearns exec’s balancing act,” The Daily Deal, June 5, 2002. • “Bear Stearns and Lehman Push Their Way Past Big Guns,” The Wall Street Journal, July 6, 2001. • “At Bear Stearns, ‘Everything is for Sale,’” BusinessWeek, July 3, 2001. • “At Bear Stearns, an ‘Ace Is Shifting Gears,” The Wall Street Journal, June 27, 2001. • “Bear Stearns: Worth Its Asking Price?” BusinessWeek, August 7, 2000. • “S.E.C. Fines a Bear Stearns Unit in Fraud Case after Long Inquiry,” The New York Times, August 6, 1999. • “Bear Stearns Income is Up, as Fees Grow from Trading,” The New York Times, July 22, 1999. • “The Optimist: Is Ace Greenberg the Sanest Man on Wall Street?” The New Yorker, April 26 – May 3, 1999.

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