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THE SUPERSTAR WHO WEARS TWO HATSWhat makes Jack Grubman the Michael Jordan of analysts? As lead telecom analyst for Salomon Smith Barney, he does what any analyst does: He issues recommendations on stocks. But his paycheck this year is a five-year package of cash and stock that was worth $25 million before the stock of Travelers Group Inc., Solly's parent, dropped by 47%. Even now, it's probably worth more than $10 million. Grubman gets the big bucks because he's among Wall Street's hottest ''superanalysts,'' high-ranked analysts who also bring in lots of investment-banking business. In the past two years, he has helped orchestrate some of telecom's biggest deals. His friendship with Worldcom Chairman Bernard C. Ebbers helped land Solly the role of lead investment banker in the $35 billion WorldCom-MCI merger. Competitors also say Grubman was a key figure in Solly's winning the advisory business in sbc Communications' $62 billion planned merger with Ameritech and Bell Atlantic's $53 billion deal for gte Corp. AWKWARD POSITION. These and other deals account for a tidy sum--some $200 million in fees and related investment-banking income since the beginning of 1997, according to Securities Data Corp. While Grubman didn't bring in all that business, industry sources say he brought in more than half. Grubman declined to comment. A Salomon spokeswoman declines to comment on Grubman's production of telecom deals but says the firm had been strong in the field even before he arrived in 1994. Grubman's dual role as analyst and banker can put him in an awkward position. As an investment banker, Grubman may become privy to inside information that he could be barred from sharing with investors and clients, even if it altered his investment opinion on the company. Sources close to the WorldCom-MCI deal say Grubman sat in on closed-door meetings weeks before the merger was announced that are normally off limits to analysts. ''He's playing with the devil,'' says one competitor. The Solly spokeswoman says ''the firm maintains strict ethical wall procedures to insulate research from confidential information related to the firm's banking clients.'' Despite his investment-banking activities, investors who follow Grubman's analytical work don't seem to have any complaints. In fact, he was the top ''wireline services'' analyst in Institutional Investor's most recent survey. ''He's accessible, knowledgeable, and I don't think he is unduly influenced by investment banking,'' says Brian B. Hayward, manager of the Invesco Worldwide Communications Fund. ''All the big-name analysts have investment-banking ties, and those of us on the other side have to keep that in the back of our minds.'' Grubman may be top gun in telecom now. But if one of the deals he orchestrates--and backs up with a ''buy'' recommendation--turns sour, his nba-size pay package might be susceptible to serious downsizing.
By Geoffrey Smith in Boston RELATED ITEMS
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Updated Sept. 24, 1998 by bwwebmaster
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