Morning Coffee: HSBC can't replace its underpaid workaholic sending 2am emails. "Abrasive" hedge fund manager's bonus plight

It seems that no one wants to be Mark Tucker at HSBC. The Financial Times reported last month that the bank was having trouble finding anyone to replace Tucker, now it's opined on why.

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Part of the problem, says the FT's Lex column, is that Tucker has been comparatively underpaid. As HSBC's chairman, he earned £1.6m ($2.2m) in pay and benefits. In his previous job, as CEO of insurance company AIA, he earned $13.4m a year more. 

Why would Tucker accept such a step-down? Because HSBC's chairman job is supposed to be part-time. Tucker presumably thought there would be lifestyle benefits. 

Instead, he seems to have suffered mission creep. For his £1.6m a year, the "intense" Tucker was known to sleep only four hours a night and send 2am emails. He was the looming power behind the CEO and spent his time commuting between London and Hong Kong. 

Now Tucker's going, and no one wants to replace him for the pay of a junior managing director in a moderate year. Headhunters MWM Consulting, who are tasked with finding Tucker's replacements, are having to shuffle back through the list of potential candidates who were passed by. HSBC is likely having to rethink its requirements and package. Maybe it will ultimately need to accept that there is no one else like Tucker. The bank's introverted, intelligent CEO Georges Elhedery will probably be pleased if this is the case: Tucker has a history of beasting the CEOs he works with; it seems he wasn't even paid for that effort. 

Separately, if you generate an alleged $60m profits for a hedge fund in an eleven-month period and these are 97% of the fund's total revenues, but your boss allegedly says, “I’m not going to pay you the bonus, fuck you, sue me,” it's probably not a good sign.

This is what allegedly happened to Robert Gagliardi, a portfolio manager at Evolution Capital Management.  

The Financial Times reports that Gagliardi wants his money and is suing Evolution for breach of contract. He claims that Evolution told him that if he generated a mere $10m it would be "excellent" and that he far exceeded that.

Evolution in turn is countersuing Gagliardi for the $7m it's paid him already and says it won't be paying him any more because a) his bonus was discretionary, b) he had an "abrasive" and "generally difficult" attitude, and c) he seems to have been friends with Pawan Passi, the Morgan Stanley block trader who admitted leaking information to investors. Gagliardi denies all this. The case continues.

Meanwhile...

Nomura's Christopher Willcox says the bank is getting better at hiring people and is more committed to the businesses it enters into. “We’d rush to aggressively invest into a market or sector and then a few years later pull out. Everything that we’re doing now is to avoid that yo-yo behaviour. Everything is based around the 2031 plan. It’s a multi-year, long-term view and that stability is something we want to emphasise." (Financial News) 

HSBC cut members of its German equities team. (Bloomberg) 

Ananth Narayan, a 56-year-old former derivatives trader at Deutsche Bank, Citi and Standard Chartered is now working for Indian regulator SEBI and was critical for bringing Jane Street's alleged market manipulation to light. (Bloomberg) 

Quant hedge funds are suffering because a surprisingly strong economy has flooded the markets — and questionable stocks — with liquidity that happened to catch quants wrong-footed. (Business Insider) 

Private equity firms are preparing for IPOs. Jon Gray at Blackstone says the firm has "the largest forward IPO pipeline since 2021." (Yahoo) 

Lazard has hired 14 MDs so far this year and wants to hire 10-15 annually over the next five years. (Financial News) 

The SEC wanted Citadel Securities and others to pay to fund something called the Consolidated Audit Trail which collects almost all US trading data and gives the SEC a live window into activity across markets. Citadel Securities and the American Securities Association successfully argued that this was unreasonable. (Bloomberg) 

Banks are expanding their significant risk transfer trades to their prime broking divisions. This seems a bit risky. “These [banks] have all these loans out to multi-managers, out to all sorts of [funds], and you’re just hoping that the margin call mechanism works and that these guys have liquidity. It’s just hard for us to understand the screw that ties this together.” (Financial Times) 

Tom Hayes celebrated winning his court case with a Diet Coke. He was formerly known as Tommy Chocolate for his preference for hot chocolate over Champagne. (Financial Times) 

For less than £3,000 a balding man can fly to Istanbul, get picked up in a limousine, stay in a four-star hotel, go on a Bosphorus cruise, visit the Hagia Sophia and get a new head of hair. (The Times)

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