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Thesememoswerewrittenbetween1978and1995.WhilecircumstanceschangedforBearStearns,the
principlesexpressedhereremaintrue.
MEMOSFROMTHECHAIRMAN
BYALANC.GREENBERGWITHAFOREWORDBY
WARRENBUFFETT
WorkmanPublishing,NewYork
AceGreenbergdoesalmosteverythingbetterthanIdo—bridge,magictricks,dogtraining,arbitrage—alltheimportantthingsinlife.Hesoexcelsatthesethatyoumightthinkitwouldgivedeepinferioritycomplexestohiscolleagues.Butifyouthinkthat,youdon’tknowmuchabouthiscolleagues.
Inthisbookwefinallylearnwhereallthiswitandwisdom—andthere’splentyofboth—comefrom:HaimchinkelMalintzAnaynikal.(IusedtohavetroublepronouncinghislastnameuntilIlearnedthatthetrickistorhymeitwithAhaynikal.)Haimchinkelseesall,knowsall,andtellsall—butonlythroughAce,hisDesignatedOraclehereonearth.
Haimchinkelismykindofguy—cheap,smart,opinionated.IjustwishI’dmethimearlierinlife,when,inthefoolishnessofyouth,Iusedtodiscardpaperclips.Butit’snevertoolate,andInowslavishlyfollowandpreachhisprinciples.
Manyyearsago,WhereAretheCustomers’Yachts?,throughahumorouslookatWallStreet,dispensedsomeofthebestinvestmentadviceeverwritten.Inthisbook,Acehasappliedthesametreatmenttomanagerialadvicewithequalsuccess.
WARRENBUFFET
Contents
EpigraphForeword1978–19881988–19911991–1995
1978–1988
Fromthetimeofitsfoundingin1923,to1978,BearStearnschangedfromasmallcommissionhousetoanimportantfactorinthesecuritiesindustryandexpandedintomanyareas,includingthosethatriskedcapital.ThedrivingforcebehindthatgrowthandexpansionwasCyLewis,whoassumedleadershipofthefirmin1936.OnApril26,1978hesufferedamassivestrokeanddiedtwodayslater;sowestartedourfiscalyearonMay1,1978withoutthemanwhowascreditedwithhavingmadeBearStearnswhatitthenwas.ItwastheprevalentthoughtonWallStreetthat,withoutCyLewis,BearStearnswouldfadeawaylikenomadsinthenight.ThoseskepticsoverlookedoneofCy’smainattributes.Heencouragedandpromotedyoungpeopleasfastastheywarrantedit.Heleftagroupthatcouldanddidcarryon.
Asthenewchiefexecutiveofficer,IknewIneededhelptoimplementpoliciesthathadbeenrunningthroughmymindforsometime.ItwasatthispointthatImetHaimchinkelMalintzAnaynikal,thedeanofbusinessphilosophers,whoimmediatelybecamemymentorandadviser.Throughmemostomyassociates,Icommunicatedhiswisdomandideasabouthowbesttostrengthenourbottomline.
ThesememoscoverthetenyearsfromMay1978toMay1988.TheymaygiveyousomeideaofourgrowthandthefunwehadparticipatinginthefurtherbuildingofBearStearns.Althoughtheyseemtohavebeenwritteninjest,IcanassureyouthatthepointsIwastryingtomakeinthesecommunicationswerethingsIbelievedinverystronglyandstilldo.Therearemanywaystorunandbuildafirm.Iusedthosememostoexpressmyphilosophies,and,inourcaseandduringmytenure,Ithinktheyworked.
MemoFROMTHEDESKOFALANC.GREENBERG
DateOctober5,1978ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
BearStearnsismovingforwardatanacceleratedrateandeverybodyiscontributing.Itisabsolutelyessentialforustobeabletotalktoourpartnersatalltimes.Allofusareentitledtoeatlunch,playgolfandgoonvacation.But,youmustleavewordwithyoursecretaryorassociateswhereyoucanbereachedatalltimes.Decisionshavetobemadeandyourinputcanbeimportant!
Iconductedastudyofthe200firmsthathavedisappearedfromWallStreetoverthelastfewyears,andIdiscoveredthat62.349%wentoutofbusinessbecausetheimportantpeopledidnotleavewordwheretheywentwhentheylefttheirdeskifevenfor10minutes.
Thatidiocywillnotoccurhere.
MemoFROMTHEDESKOFALANC.GREENBERG
DateMarch13,1979ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
TheExecutiveCommitteelastnightapprovedagroupofpeoplewhowillbeaskedtobecomeLimitedPartnersofBear,Stearns&Co.,subjecttotheapprovaloftheotherGeneralPartners.Youwillbereceivingthislistshortly.
CarlHolstromhasjustinformedmethatwehavesigneda$12millionlong-termloanagreementwithamajorinsurancecompany.ThiswillreplaceourloanwiththeFirstNationalBankofChicago.TheimplicationsandtheactualdollarsavingsofthisagreementareoftremendousimportancetoBear,Stearns&Co.
IalsojustreceivedthePandLresultsforFebruaryand,inmyopinion,theyweregreat.ThesethreeitemswillbecoveredindetailatthePartners’MeetingonMarch19th.
ThedevelopmentsatBearStearnscertainlyseemtobepositiveandasaresultwewill,ofcourse,intensifyoursurveillanceofallpositionsandexpenses.YouknowhowIfeelaboutthedangersofoverconfidence.
Itcertainlylookslikewehaveadynamicfutureinstoreaslongaswerememberthewordsofthefamousphilosopher,HaimchinkelMalintzAnaynikal:“thouwilldowellincommerceaslongasthoudoesnotbelievethineownodorisperfume.”
MemoFROMTHEDESKOFALANC.GREENBERG
DateMarch23,1979ToAllGeneral&LimitedPartnersandOtherPotentialPerfumeLoversFromEclecticThoughtsfromtheCompleteWorksofHaimchinkelMalintz
AnaynikalCCSubject
WitterHasDeficitof$886,000TheDeanWitterReynoldsOrganizationInc.,whichoperatesaworldwidesecuritiesfirm,reported
yesterdayalossof$886,000forthesecondfiscalquarterendedFeb.28andaprofitof$2.5million,or28centsashare,forthesixmonths.
In the year-earlier quarter, net income was $713,000, or 9 cents a share, and in the six-monthperiod, netwas $3million, or 49 cents a share, on fewer shares outstanding. The company noted,however,thatthefiguresforthepreviousyear’speriodsincludedresultsforthecombinedcompaniesforonlytwomonths.
ThecompanywasformedJan.3,1978,throughtheconsolidationoftheDeanWitterOrganizationandReynoldsSecuritiesInternational,inoneofthelargestmergersinbrokeragehistory.
Revenues in the quarter increased to $114million from$81.1million,while for the sixmonthstheyjumpedto$244.2millionfrom$141.4million,againwithcombinedresultsforonlytwomonths.ResultsTermedUnsatisfactory
WilliamM.Witter, chairman, said: “We are not satisfied with the performance of DeanWitterReynoldsInc.,ourprincipalsubsidiary,duringthesecondquarterwhenitsrevenuesdeclinedbyabout$17 million from the previous first quarter. However, that unit’s performance must be measuredagainstabackgroundwherethemarketstendedtobetreacherousandactivitydeceptivelylow.”
Thefirmcontinuestomakesubstantialinvestmentsinadvertising,operationalimprovementsandinphysicalfacilities,Mr.Witterdeclared.
Directors of the organization authorized the repurchase of up to 400,000 shares of outstandingcommon stock. These shares could be used for stock options and general corporate purposes, thecompanystated.
(fromTheWallStreetJournal)
MemoFROMTHEDESKOFALANC.GREENBERG
DateJune15,1979ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
Duringthelastfewdays,thenewspapershavedevotedalotofspacetotheprofitsgeneratedbytheNewYorkStockExchangeMemberFirmsduringtheperiodofJanuary,FebruaryandMarchof1979.Ithoughtyoumightliketoknowhowwedidusingthesameyardstick.
ComparisonofFocus1stQuarterCalendar1979
($000)
BearStearns Industry BearStearnsas%ofIndustry
Revenues $51,595 $2,430,700 2.1%
Expenses 40,280 2,197,000 1.8%
IncomeBeforeTaxes 11,315 233,700 4.8%
Iwouldalsoliketoaddthatthelastthreeweekshavebeenathingofbeauty.Everydepartmentisreallyboilingandsomeofthenewpeoplethatwehavetakenonarestartingtomakerealcontributions.
Becauseofthisgoodnews,Ithinkitistimeforusonceagaintospendsometimereadingtheworksof,andreflectingonthethoughtsof,Haimchinkel
MalintzAnaynikal.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJanuary30,1980ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
Severalofmypartnershavespokentomeduringthislastweekabouttheremarkablewaythingsseemtobefallinginplaceforus.Someofthethingsthathavehappenedtoushavebeenduetoourownefforts,butequally,someofourgoodfortuneoflatehasbeenduetoluck.
Ihavebeenaroundlongenoughtoknowthattheshoeusuallyfallsonyourheadwhenyouleastexpectit.AllofthesefactorshavemademereflectonthewordsofHaimchinkelMalintzAnaynikal.IhavetakenthelibertyofquotinginfullfromthelasttwoparagraphsofmymemodatedMarch13,1979.
“ThedevelopmentsatBearStearnscertainlyseemtobepositiveandasaresult,wewill,ofcourse,intensifyoursurveillanceofallpositionsandexpenses.YouknowhowIfeelaboutthedangersofoverconfidence.
Itcertainlylookslikewehaveadynamicfutureinstoreaslongaswerememberthewordsofthefamousphilosopher,HaimchinkelMalintzAnaynikal,‘thouwilldowellincommerceaslongasthoudoesnotbelievethineownodorisperfume.’”
MemoFROMTHEDESKOFALANC.GREENBERG
DateMay28,1980ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
ThemonthofMaywasthefirstmonthofournewfiscalyearandforbookkeepingpurposesitendedonMay22nd.PreliminaryindicationsarethatitappearstobethebestmonthinthehistoryofBearStearns.
Beforewegetcarriedaway,thereisonethingthatIdowanttoemphasize.Weareworkingwithmorecapitalthaneverbefore,soifeverymonthisnotarecord-breaker,weareprobablygettinglazy.Wehaveplentyofroomforimprovementandtherearestillanumberofleaksinthedike.Infact,theonlyareathatIthinkisrunningat100%efficiencyistheerroraccount.
Iimploreourpartnerswhosupervisesalesmentoincreasetheirsurveillanceofallpersonnel.IwantallpartnersinthetradingareatopayparticularattentionthatourpositionsdonotincreasedramaticallyinsizeandthatwecontinuetoassiduouslyfollowtherulesofHaimchinkelMalintzAnaynikalintheareaofloss-taking,freshnessofpositionsandbodyperfume.*
Ihave,ofcourse,askedCarlHolstromtoonceagaintightenallsurveillanceofexpenseaccountsforpartnersandourassociates.YoushouldalsobehearingshortlyfromMarvinDavidsonaboutourballooningdepartmentalexpenses.
Itisuptoallofustofightourunrelentingenemies—complacency,overconfidenceandconceit.
*ForthoseofyouwhomighthaveforgottenHaimchinkelMalintzAnaynikal’scommentsonthissubject,askPeggyMoynihanformymemodated3/13/79.
MemoFROMTHEDESKOFALANC.GREENBERG
DateOctober17,1980ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
October16thwasthefifthbiggestdayinthehistoryoftheNewYorkStockExchange.ItwasthebiggestdayinBearStearns’historybyabout20%.Iamreferringtobothnumberofticketsandoverallcommissionrevenues.
Ourincreaseinmarketshareiscertainlysomethingtobeproudof,butcooperationwiththeOperationspersonnelhasbecomemorecriticalthanever.Pleasemakeitapointthatthepeoplewhoworkwithyoudoeverythingtohelpoperationalpersonnelwhenevertheycomeincontactwiththem.
IwouldalsoliketopointoutthatthephilosophyandworksofHaimchinkelMalintzAnaynikalareonceagain“must”reading.Ifyoumisplacedyourcopy,pleasecallPeggyMoynihanonextension5369.
MemoFROMTHEDESKOFALANC.GREENBERG
DateMay5,1981ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
TherehasbeenalotofpublicitylatelyaboutfirmshiringstudentswithMBAdegrees.Ithinkitisimportantthatwecontinueapolicythathashelpedusprosperwhilegrowingfrom700peopleeightyearsagotoover2,600today.
Ourfirstdesireistopromotefromwithin.IfsomebodywithanMBAdegreeappliesforajob,wewillcertainlynotholditagainstthem,butwearereallylookingforpeoplewithPSD*degrees.TheybuiltthisfirmandthereareplentyaroundbecauseourcompetitionseemstoberestrictingthemselvestoMBA’s.
Ifwearesmart,wewillendupwiththefutureCyLewises,GusLevysandBunnyLaskers.ThesemenmadetheirmarkwithahighschooldegreeandaPSD.
*PSDstandsforpoor,smartandadeepdesiretobecomerich.
MemoFROMTHEDESKOFALANC.GREENBERG
DateAugust20,1982ToGeneralPartnersFromAlanC.GreenbergCCSubject
Everypartnerisentitledtoavacation,andwehaveneverbeenparticularlyfussyabouthowlongthevacationisnordowekeepscoreonhowmuchtimeistakenoverthecourseoftheyear.Idofeelthatifapartnerisnotonvacation,heshouldtreatFridaylikeanyotherdayandshowupforafullday’swork.
HaimchinkelMalintzAnaynikalnevertookoffaFridayinhisentirelife.
MemoFROMTHEDESKOFALANC.GREENBERG
DateOctober5,1982ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
SeptemberlookslikeitwasthebestmonthinthehistoryofBearStearns.ThepastfourweeksappeartobeparticularlygratifyingbecauseIthinkeveryareacontributedanditdemonstratedwhatsomanyofushavebeensayingaboutourpotentialifconditionschangedforthebetter.
Afteramonthliketheonewejustexperienced,Ithinkweshouldbeonourguardagainstthenegativesthatgoalongwithgreatsuccess.Iamspeakingofcomplacency,sloppiness,relaxingonexpenses,cockinessandjustgettingcarelessingeneral.
Thisisthetimetobeonourguard.Ifthemarketdoesgoourway,Iwanttomakeeverydollarandleavenothingonthetable.Themarketmayturnsouragain,sodonotforgetforamomentwhatthegreatcoachHaimchinkelMalintzAnaynikalsaidmanyyearsago,“whenthegoinggetstough,thetoughstartselling.”
Ourfirmhasdynamicmoney-makingpotentialandwillcontinuetogrowandprosperbeyondourwildestdreamsifwedevoteallofourworkinghourstoBear,Stearns&Co.ThishasledtheExecutiveCommitteetodecidethatnoGeneralPartnersorGeneralPartners’spousescanmakeanyoutsideinvestments(otherthanpubliclytradedstocksandbondsoraresidence)withouttheapprovaloftheExecutiveCommittee.TheExecutiveCommitteedoesnotwantourpartnersworryingorthinkingaboutanybusinessotherthanBearStearns.Owninganequityinterestinourfirmisthebestinvestmentanyofuswilleversee;soletusgiveB.S.100%ofoureffort.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJanuary10,1983ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCC
SubjectErrorAccount
Wemusthaveagreatbusiness,becauseIthinkwebrokeevenlastweekafterpayingforahorrendousseriesoferrors.Iamwellawarethathumanswillalwaysmakeerrors.Myirritationcomesfromthefactthattheseerrorsarenotcaughtimmediately.Inmanycases,thisisbecausetheproduceristoolazytolookathisrunthefollowingday;toolazytolookattheregisteredrepresentativecopiesoftheconfirmsandtoolazytocheckthemonthlystatements.
Thefirmhasalwaysbeenveryunderstandingwhenerrorsaremade.Wewillnotbeunderstandingiftheerrorisnotcaughtbecauseofsubsequentstupidityandlaziness.
PleaseseethatthepeoplewhoworkwithandforyouunderstandtherulesbecauseIdonotwantanycryingwhenanassociateblowsayear’ssalary.
YouareawarethatIhavesaidforyearsthatcomplacencyisourgreatestenemy.Isthisthefirstsymptomofourdecadence?Ifitis,Iknowhowtocurethisformofsloppiness.
MemoFROMTHEDESKOFALANC.GREENBERG
DateMay2,1983ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
HaimchinkelMalintzAnaynikaljustcalledandremindedmeofsomethingthatIshouldhavethoughtofwithoutanyhelp.
TheyearwasoverlastFridayanditwasagoodone,butlastyearisgone.Thescorerightnowisnothingtonothing.Nobodycares(especiallyourcompetition)whatwedidlastyear.
LetusgotothewhipandmakethemonthofMayanindicationofwhatwearegoingtodoforthecomingtwelvemonths.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJune22,1983ToAllPersonnelFromAlanC.GreenbergCC
SubjectIncomingMail,Packages,CarrierPigeons,andothermethodsoftransportpertainingtoitemsdeliveredtothepremisesofBearStearns.
NewYorkStockExchangeRulesrequirethatweopenandexamineallincomingmailbeforeitisdistributedtotheaddressee.“Incomingmail”includesitemsandpackagesdeliveredtothefirmbyhandorpickedupbyourmessengerservice.Allpackagesdeliveredtothefirmaretobeopenedandthecontentsinspected.BearStearnshasfollowedthisdirectiveinthepastandwewillfollowitmuchmoreassiduouslyinthefuture.
Wearetriplingourinspectioncapability.Thereasonforthisisthatapackagewerecentlyopenedwasfoundtocontain“contraband.”Theitemwasconfiscatedanddestroyed.ThenexttimewefindanyonesendingorreceivinganysuchmatteratBearStearns,wewillnotifytheproperauthorities.Regardlessoftheactiontakenbythepolice,BearStearnswillshownomercy.Anexamplewillbemadeofthenextandfutureoffenders.
Ifanyonedoesnotunderstandthismemo,pleasecomeandseemeandIwillexplainitpersonally!
MemoFROMTHEDESKOFALANC.GREENBERG
DateJune24,1983ToAllGeneralPartnersFromAlanC.GreenbergCCSubject
OnOctober5,1978,theattachedmemowasdistributed.Wehavebeenverysuccessfulsincethatmemowasissued,andIthinkthat93.4%ofoursuccesshasbeenduetotheinstantavailabilityofourpartnersandassociates.
Duringthepastmonth,wehavebeenverybusyandsomeofushavebeenstrayingawayfromthefundamentals,suchasleavingwordatalltimeswheretheymaybefound.Wemustnotdeviatefromthebasics.
IhavecontactedMarlinPerkinsoftheSt.LouisZooandthenextpersonthatIhavetroublefindingwillbefittedoutwitharadiocollar.Pleaseimpressourpolicyonthepeoplewhoworkwithandunderyou.Thecollarsarebulkyandnotveryattractive.
MemoFROMTHEDESKOFALANC.GREENBERG
DateSeptember9,1983ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
HaimchinkelMalintzAnaynikaljustcalledandtoldmehewasveryimpressedwiththeresultsforthemonthofAugust.Ihavenotseenthemyet,butiftheyareasgoodasHaimchinkelMalintzAnaynikalthinkstheyare,thenAugustwasprobablythebestmonthwehaveeverhadinrelativeterms.
Thebondmarketandthestockmarketdidnothing,buttheBearStearnsmachinediditsthing.Hiscall,however,remindedmeofthewarninghegaveussomeyearsago,“thouwilldowellincommerceaslongasthoudoesnotbelievethineownodorisperfume.”Iassuredhimthatdespiteoursuccess,wearestilltryingtobeascarefulandaspunctiliousasalways.
DONOTMAKEALIAROUTOFME.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJanuary25,1984ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
Youhaveprobablyseenthepublishedresultsofourcompetitorsforthepastthreemonths.Youarealsoprobablyuptodateonhowwehavedoneforthepastthreemonthsandthefirsteightmonthsofthisfiscalyear.
ObservingthesefiguresmakesmemoredeterminedthanevertofollowthesimpleruleslaiddownbytheDeanofBusinessPhilosophers,HaimchinkelMalintzAnaynikal:1-Sticktothineownbusiness.
2-Watchthyshop.3-Limitthylosses.4-Watchthyexpenseslikeahawk.5-Stayhumble,humble,humble.6-Whendealingwithanewaccount,knowthycustomerandknowthycustomer’smoneyisup.
Atthepartnersmeetingtwoweeksago,itwaspointedouttomebyHaimchinkelMalintzAnaynikalthatthehorsd’oeuvreshadbeenupgradedconsiderablyfrompeanuts.Youwillbehappytoknowthatwearenowbacktopeanuts.Thismayseemlikeasmallsaving,butit’sthethoughtthatcounts.
MemoFROMTHEDESKOFALANC.GREENBERG
DateApril10,1984ToAllGeneral&LimitedPartnersFromSirAlanC.GreenbergCCSubject
ThefiguresforthemonthofMarchwerejustgiventome.Wehavehadbettermonthsinabsoluteterms,butonarelativebasisIthinklastmonth’sperformancewasthebestIhaveeverseen.Ialsothinkthatourrecordforthefirstthreemonthsof1984issomethingtobeproudofbecausethemarketsweredown,difficultanddangerousatbest.
HaimchinkelMalintzAnaynikalrecentlybroughttomyattentioncertainintercompanyfeudsthathaveledtothedownfalloffirmssmarter,richerandlargerthanours.Watchingforthesesignsofdissensionwillbeahighpriorityofmine.
Wheneveryouhaveapartnershipofover80people,thereisboundtobeapersonortwowhoisnotyourexactcupofyogurt.Foryears,thepartnersofthisfirmhavegottenalongremarkablywellandthecooperationatthistimeisgreat.OneofthethingsIamgoingtobeextremelysensitiveaboutinthefuture—andcomedownveryhardonwhenIseeorhearofit—isacrimonyamongpartners.Honestmenmaydiffer,butwhenthedifferencebecomesanimosity,youcanhaveproblems.Iamnotgoingtoletpersonalconflictshaveanyeffectonthenetincomeofourgoldengoose.
Theyearisnotoveryetandwehave20dayslefttomakethisonetobeproudof.HopetoseeallofyouinpersonattheAnnualMeeting.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJULY23,1984ToALLREGISTEREDREPRESENTATIVESFromALANC.GREENBERGCCSubject
Thesearetoughtimes.ThemarkethasbeenextremelydifficultsincelastJuly.ItiscertainlynofuntowalkinonaMondaymorningandgethitwithatwelve-pointdecline.
IhopeallofyouknowhowimportantIthinkyouaretoBearStearnsandhowIempathizewithwhatyouaregoingthrough.
ItisimportanttomethateverydepartmentthatinterreactswiththeRegisteredRepresentativesgive100%supportnowmorethanevertotheeffortsanddesiresoftheRegisteredRepresentatives.
YouwillbedoingmeafavorifyoucallmeimmediatelyanytimeyouthinkyouaregettinglessthanTripleAtreatment.
Thesupportareasareunderextremepressure,butthatwillneverbeanexcusefornottreatingoursalesforceinthemannertheydeserve.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJuly25,1984ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
Thenewspapersarefullofthequarterlyfinancialresultsofthepubliclyownedinvestmentbankingfirms.ForthethreemonthsendedJune30th,Bear,Stearns&Co.hadalossof$3,473,000,afterinterestonpartners’capital.
ThatfigurewillnothelpyoubuymuchfromTiffany,butitdoesmeanthatwearekeepingthingsunderreasonablecontrol.Keepinmindthatthefiguresofourcorporatecompetitorsareusuallyaftertaxcredits.Forexample,thelossof$33millionbyMerrill,Lynch,reportedthismorning,wasreally$90millionbeforetaxcredits.
Wearenotpanicking;wearenotlayingoffpeople,butwearemakingarealefforttocutexpenses.Theothersideofthecoiniswehavehiredalargenumberofnumberonedraftpicksinthelastfewmonths.Thisisthetimetohiregoodpeople.Wehavefollowedthispolicyinthepast,andIamconvincedthatwewillbeprovencorrectonceagain.
Ididnotwanttowritethismemo,butHaimchinkelMalintzAnaynikalinsistedthatIcommunicatewiththetroops,evenwhenthenewsislessthanperfect.HaimchinkelMalintzAnaynikalalsomentionedthatnowisthetimenottohidefromclients.Ittakesrealcouragetomakecallswhenyouknowthereceptionmightbehostile.Buttherearetimeswhenwemustfacethemusic.Itwillpayoffwhenthemarketturns,andIpromiseyouthemarketwillturn.Ihopesoonerratherthanlater.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJune19,1985ToAllGeneral&LimitedPartnersFromAlanC.GreenbergCCSubject
ThemonthofMayishistory,butitlookslikewedidgettenrunsinthefirstinning.IfranklycannotrememberanytimeinthepastwhereweeverbrokeeveninthemonthofMay,muchlessmademoney.
HaimchinkelMalintzdroppeddown,sawthefiguresandmadesomesuggestions.Weshouldnotlosesightoffundamentals,suchascuttingexpensesandbeingeveralerttothefactthatifwearenotcareful,therearesomepeoplewhowouldliketostealthewholeplaceoutfromunderus.
Hepointedouttomethatthetendencyistocutexpenseswhenthingsaretoughandhowstupidthatlineofreasoningis.Whenthingsaregood,youshouldbeevenmorecarefulofexpensesbecauseitisridiculoustoleaveanythingonthetablewhenyouholdaroyalflush.Wemustcontinuetobealert,aggressiveandnevercomplacent.Andlast,butmaybemostimportant,thepartnersofthisfirmmustcontinuetoworktogetherandlearntooverlookpettydifferences.WeareallexpendableandIhopethatyourExecutiveCommitteedoesnothavetoprovethattoanyofus.
MemoFROMTHEDESKOFALANC.GREENBERG
DateAugust9,1985ToGENERAL&LIMITEDPARTNERSFromAlanC.GreenbergCC
SubjectEXPENSES
Iwasjustshowntheresultsforourfirstquarter.Theywereexcellent.Whenmortalsgothroughaprosperousperiod,itseemstobehumannatureforexpensestoballoon.Wearegoingtobetheexception.Ihavejustinformedthepurchasingdepartmentthattheyshouldnolongerpurchasepaperclips.Allofusreceivedocumentseverydaywithpaperclipsonthem.Ifwesavethesepaperclips,notonlywillwehaveenoughforourownuse,butwewillalso,inashorttime,beawashinthelittlecritters.Periodically,wewillcollectexcesspaperclipsandsellthem(sincethecosttousiszero,theArbitrageDepartmenttellsmethereturnoncapitalwillbeaboveaverage).Thisactionmayseemalittlepetty,butanythingwecandotomakeourpeopleconsciousofexpensesisworthwhile.
Inadditiontothepaperclipcaper,wealsoaregoingtocutdownonorderingtheblueenvelopesusedforinterofficemail.Theseenvelopescanbeusedoverandoveragain.Allofusaregoingtohelpourbottomlinegrow.
BearStearnsisprobablygoingtosellstocktothepublic,andthereisoneguaranteethatIwouldliketogivethepotentialbuyersofourstock—theyaregoingtogetthefairestshakefromusthatmanagementcangiveanypublicshareholder.Thisplaceisgoingtoberuntight,andthereasonsarenotallaltruistic.Wearenotgoingpublicfortheperks.Wearegoingpublicforanumberofreasons,andoneisthatwewantthestocktoappreciate.
Youhaveprobablyguessedbynowthatthesethoughtsarenotoriginal.TheycamefromoneofHaimchinkelMalintzAnaynikal’searlierworks.Histhoughtshavenotexactlysteereduswrongsofar.Let’sstickwithhistheoriestillhelets
usdown.
MemoFROMTHEDESKOFALANC.GREENBERG
DateAugust15,1985ToGENERAL&LIMITEDPARTNERSFromAlanC.GreenbergCC
SubjectGETTINGRICHER
Thankyou,thankyou,thankyou!Theresponsetothememoonpaperclipsandenvelopeshasbeenoverwhelming.Itseemsthatwealreadyhaveanexcessofpaperclips.Thisexcesswillbepickedupshortlybyadesignatedpaper-clipper-picker-upperpersonand,ofcourse,willbesoldthroughcompetitivebidding.
Becauseofyourcooperation,Iwouldliketoextendourcost-cuttingeffortstoalargermatter.BearStearnswillnolongerpurchaserubberbands.Ifwecansavepaperclipsfromincomingmail,wecansaverubberbands,andmyhopeisthatwecanbecomeawashinthoselittlestretchiesalso.
Obviously,ifwecanhandletherubberbandchallenge,Ihavesomethingevenbiggerinmind.
Whenyouareaprivateenterprise,savingsonexpensesgotothebottomline.Whenyouareownedbythepublic,savingsstillgotothebottomline,buttheyareinturnmagnifiedbythemultiplethestockcarries.
Ifyouhavetroubleunderstandingthelastparagraph,eithertrustmeorcallHaimchinkelMalintzAnaynikaldirectly.
MemoFROMTHEDESKOFALANC.GREENBERG
DateSeptember10,1985ToGENERAL&LIMITEDPARTNERSFromAlanC.GreenbergCC
SubjectMEMOPADS
Wehavebeensupplyingeveryonewithmemopads.Thesepadshave,atthetop,ourlogoandalsoaperson’snameandtelephonenumber.Thisisconceptuallywrong.Weareinaperson-to-personbusiness.Itwouldbemuchwarmerifthesenderofanotesigneditwithhisnameandtelephonenumberalongwithsomesweetwords,suchas“Iloveyou”or“Ineedmorebusinesstofeedmyfamily.”
Therefore,continuingourgoaloftryingtoincreasetheincomeofourassociates,padsfromnowonwillonlyhaveBear,Stearns&Co.printedacrossthetop.
Itisamazinghowonegoodideasometimesproducesunforeseenbenefits.HaimchinkelMalintzAnaynikaljustinformedmethatthissuperiorwayofcommunicatingwillsaveus$45,000ayear.Whatapleasantsurprise!!
MemoFROMTHEDESKOFALANC.GREENBERG
DateDecember13,1985ToMANAGING&ASSOCIATEDIRECTORSFromAlanC.GreenbergCCSubject
Thingsaretoogood!!Itisatatimelikethisthatwemustbeparticularlycareful,wary,smart,suspiciousand,ingeneral,thankfulthatwearealive.ThoseofuswhohavebeenaroundforawhileknowwhatImean.
Whenconditionsarethisideal,weareusuallybeingsetupforamajorunpleasantry.Thistimearoundletustrytoleavenothingonthetable.Timeswillchange,anditwillbenicetohaveplentyoffatonourbones.
Letuscontinuetowatchtheshopandrealizethatnoneofusarereallyverysmart.Wearejustintherightplaceattherighttime.LetuscontinuetowatchourexpenseslikeagreenbergsoourbottomlinelookslikeacombinationofMissAmericaandHaimchinkelMalintzAnaynikal.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJanuary6,1986ToManaging&AssociateDirectorsFromAlanC.GreenbergCCSubject
HaimchinkelMalintzAnaynikalwasrightagain.Someofyoumayhavehaddoubtsabouthistheoryontheeffectsofexpensecutting,butthemonthofDecembershouldproveonceandforallthatthekeytoprofitabilityiscuttingdownonthewastefuluseofpaperclipsandrubberbands.
IthinkDecember1985wasthebiggestmonthinthehistoryofBearStearns.Ifwecancontinuebringinginthebusinessandcuttingexpenses,thestockmaygetto231/4.
Nowthatyouareallbelievers,Iwouldliketoseesomerealeffortandresultsintheexpense-cuttingarea.Therestofourindustrycutsexpenseswhenbusinessisbad.Wetrytocutexpensesallthetime,butparticularlywhenbusinessisgreat.
WouldwehavethoughtofthisbrilliantbitoflogicwithoutthehelpofHaimchinkelMalintzAnaynikal?Idoubtit,butletuscontinuetodothingsdifferentlythanothers.Ourrecordisprettygood.
MemoFROMTHEDESKOFALANC.GREENBERG
DateFebruary25,1986ToMANAGING&ASSOCIATEDIRECTORSFromAlanC.GreenbergCCSubject
TheP&Lforthefirstthreemonthsofourpublicexistenceiscertainlysomethingtobeproudof.BeforewefallintooneofthetrapsthatHaimchinkelMalintzAnaynikalsooftenwarnedusabout,pleasekeepinmindthatwewereaidedandabettedbyagreatstockandbondmarket.Ithinkitisparticularlyimportantthatallofustakealittletimeandreviewsomefundamentals:1.Wemustcontinuedoingourbesttocontrolexpenses.Everydollarwesaveonexpensesgoesdirectlytothebottomline.Thatiswhatallofusshouldbeconcernedabout,oryouareatthewrongfirm.Expensesshouldbewatchedatalltimes,butespeciallywhenbusinessisgood.
2.Wemustcontinuetobealertforscamsandconartists.Wemustwatchforunusualbehaviorbythepeopleweworkwith.Whatisunusualbehavior?SomethingsubtlelikesomebodywhodrivesaRolls-Royceonasalarythatcanbarelysupportrollerskates.
3.Dothepeopleyouworkwithanswerphonecallsinacourteousmanner?Areallphonecallsreturned?Icouldn’tcarelesswhatapersondoesinhisownhome,butIamanutaboutreturningphonecallsthataremadetoourpersonnelduringtheworkday.Idonotcareifthecallerissellingmalaria.Callsmustbereturned!
4.Arethereceptionistsandtelephoneoperatorsinallofourofficeswarmandcourteous,andiftheyare,aretheythankedappropriately?Rememberthatinmostcasesthefirstcontactaclienthaswithusisthroughatelephoneoperatororreceptionist.
5.DoyouandyourassociatesleavewordwhereyouareatalltimessothatfindingyouisnotlikehuntingfortheAndreaDoria?
6.InSeptemberof1983,amemowasdistributedwithaquotefromtheworksofHaimchinkelMalintzAnaynikal.Itisworthrepeating.“Amanwilldowellincommerceaslongashedoesnotbelievethathisownbodyodorisperfume.”Thatstillholdstrue.Wemustnotgetcockyoroverconfident.
RememberthattheGreenBayPackerswonbecausetheyexecutedthefundamentalsbetterthantheircompetition.Trickplaysmakeheadlines,butwinnersexecutethebasics.
MemoFROMTHEDESKOFALANC.GREENBERG
DateApril10,1986ToMANAGING&ASSOCIATEDIRECTORSFromALANC.GREENBERGCC
SubjectERRORACCOUNT
Itissafetosaythatourerroraccountisrunningatalmost100%efficiency.Wehavegottodosomethingtostoptheseinsanemistakes,becausethelosscomesrightoffthebottomline,andyouknowhowIfeelaboutthatparticularstatistic.
Wehavebeenrathercavalieraboutnotchargingpeopleforerrors.Thissystemobviouslyhasnotbeenworking,andwhensomethingdoesnotworkIbelieveinchange.Fromthismomenton,wereservetherighttodebitpeoplewhomakeerrors,andthisincludesmanagingdirectors.Fromthisdayon,ifIorsomeonewhoworksformedoessomethingstupid,Iamgoingtopayforit.SoIwouldsuggestthatallofusbecareful.
RememberwhatHaimchinkelMalintzAnaynikalsaid—“Thetimetostopstupidityandbetoughoncostsiswhentimesaregood.Anyschlemiel*andmostschlimazels*trytocutcostswhentimesarebad.”
*ForthosewhodonotspeakPersian,aschlemielistheonewhospillsthesoup.Hespillsitontheschlimazel.
MemoFROMTHEDESKOFALANC.GREENBERG
DateApril14,1986ToMANAGING&ASSOCIATEDIRECTORSFromAlanC.GreenbergCC
SubjectFEDERALEXPRESS
Thismaycomeasasurprisetosomeofyou,butFederalExpressisnotawhollyownedsubsidiaryofBear,Stearns&Co.Inc.Imentionthisbecausewehavebeenspending$50,000amonthwiththemandthereisnoexplanationtojustifythisexpenditureunlessitwasanintercompanytransfer.
IcheckedonhowmuchIwaschargedforFederalExpressingpackagestomyclients,andthefigureforthepast11monthswas$68.32.OneofthosechargeswasforapackagesenttoHaimchinkelMalintzAnaynikal.Thatshouldbeafirmexpense,butIamnotgoingtomakeabigthingoutofit.MypointisthatFederalExpressisaluxury,andbusinesscanstillbedonebyusingtheU.S.Mail.
IcanassureyouthatfutureuseofFederalExpressisgoingtobeverycloselymonitored.Thefactthatitwasn’tuptonowismyfault,andItakefullblame.
Afterthinkingitover,IamgoingtohaveRussianreversethat$25thatwaschargedtomeforsendingourfigurestoHaimchinkelMalintzAnaynikal.Wemuststriveforaccountingperfection.
MemoFROMTHEDESKOFALANC.GREENBERG
DateApril18,1986ToManaging&AssociateDirectorsFromAlanC.GreenbergCC
SubjectHOWTOGETRICHER
Itisamazinghoweasyitistosavesubstantialmoneywhenyoureallyputyourmindtoit.IwasdreamingofHaimchinkelMalintzAnaynikaltheothernightandthefollowingideacametome.
Allofususeblueenvelopesforsendingwrittenmaterialaroundtheoffice.Ourteamhasdoneagreatjobofsavingtheseenvelopesandreusingthem,butourscotchtapeexpensehasgoneup.Fromthisdayon,instructyoursecretarytolickonlytheleftsideoftheflapwhensendingtheenvelope.Thereasonforthiswillamazeyou,andmakeyouwonderwhyyoudidnotthinkofthisyourself.
Iftheenvelopeisgentlyopenedbytherecipient,itcanbeusedagainandsealed,withoutusingscotchtape,byyoursecretarylickingtherightsideoftheflapandthensealingit.
Afterallofushavebecomeaccustomedtoaccurateandpreciselicking,afurtherextensionofthiswillbetolickonlytheleftthird,andthenthemiddleforthenexttrip,andtherightsideforthepenultimatevoyage.Ifonehasasmalltongueandgoodcoordination,anenvelopecouldbeopenedandresealedtentimes.
Thebeautyofthisthoughtisthatnotonlyisitpractical,butitis100%sanitary.Ourbottomlinewillcontinuetogrowifallofuscancomeupwithbrillianciessimilartothis.
MemoFROMTHEDESKOFALANC.GREENBERG
DateAugust29,1986ToMANAGING&ASSOCIATEDIRECTORSFromAlanC.GreenbergCCSubject
Augustisnowhistory,butIhatedtoseeitend.Themonthgavemeagreatdealofpleasure.Thefiguresarenotavailableyet.Theywillbeexcellentbutnotanewrecord.
AugustgavemeachargebecauseIcannotrememberatimewhenallthedepartmentsseemedtobeworkingsowell.Wearereallyhittingonallcylinders.Frankly,theonlynegativewasourcontinuingproblemoflossesduetoclericalerrors.
RememberwhatHaimchinkelMalintzAnaynikaloncesaid,“Thestrengthofthestrongestchainisdeterminedbyitsweakestschmuck.”ItisimportantthateverydepartmentofBearStearnscontinuetooperateatmaximumefficiency.
Congratulationstoallofyou!
Becausewearerolling,itisessentialthatwereviewthefundamentalsofHaimchinkelMalintzAnaynikal.
1.Reinforceonceagainwithyourassociatesthatanythingunusualshouldbebroughttotheattentionofasuperioratonce.Wewillneverbeupsetifitisafalsealarm.
2.Donotgetconceitedorcocky.3.Checkonthepeoplewhoanswertelephones.Aretheycourteous?4.Returnallcallsassoonaspossible.5.Watchexpenses—likeahawk.Nowisthetimetocutoutfat!Therestoftheworldcutsexpenseswhenbusinessturnssour.Withyourhelp,wewillbedifferent,smarterandricher.
6.Reduceexpenses.7.Cutexpenses.8.Donotspendmoneyfrivolously.Everydollarwesavewillgotothebottomline.
MemoFROMTHEDESKOFALANC.GREENBERG
DateDecember9,1986ToManagingDirectorsandAssociateDirectorsFromAlanC.GreenbergCC
SubjectGettingRicher
Ourgrowthcontinuesunabated.Itisajoytobehold,butwhenyougetbusy,Iamafraidsomeleakagedoesoccur.Threeexamplesaredetailedbelow:1.Telephonesnotbeingansweredpromptlyincertainareas.Hiremorepeople!Afteryouhirethem,explaintothemhowimportantitisthattheybecourteousandattentivetoanyonewhocalls.
2.Thisisgoingtobehardforyoutobelieve,butitisactuallyafact.Icalledtheheadofoneofourmajorareasyesterday,andalthoughthemanwasin,hissecretarydidnotknowwheretofindhim!Iknowthatthistestsmycredibilitywithyou,butitistrue.YouarewellawarethatthisviolatesoneofHaimchinkelMalintzAnaynikal’scardinalrules.IhopeHMA*doesnothearaboutthisincident.
3.ItalsohurtsmetoreportthatIsawsomebodythrowawayausedenvelopebeforeitmade22tripsaroundtheoffice.Ican’tstandtoseepeopleburnmoney.ThankgoodnessIhavenotseenanyonethrowingawayrubberbands**orpaperclips.Burningmoneyaffectsourbottomline,andyourExecutiveCommitteeisjudgedmainlybyonestatistic,thebottomline.
Letusalltightenupandrereadthe98memosIhavesentoutoverthepastfewyears.
*ThisisaclevercodeforHaimchinkelMalintzAnaynikal.
**Rubberbandscanbeusedevenwhentheybreak.Taketheendsandtieasquareknot.IfyouneedtoknowhowtotieasquareknotcallBobbySteinberg.Hehasacubscouttroopconsistingonlyofhissons.
MemoFROMTHEDESKOFALANC.GREENBERG
DateFebruary5,1987ToAllManagingDirectorsandAssociateDirectorsFromAlanC.GreenbergCCSubject
IhaveneverbeenmoreoptimisticaboutthefutureofBearStearnsthanIamnow.Ourthirdquarterisoverandsinceweareapubliccompany,thereisverylittleIcansayaboutit,butIthinkthatanybodywhoworksherecanmakeaverygoodguessofhowwedid.Thefigures*willbereleasedinlateFebruary.
Thatisonlyonereasonformyoptimism.Ithasbecomeperfectlycleartomethatseveralofourdepartmentshavebeenprofitableduringthepastfewyears,despitethefactthattheywerenotexactlycompetingona“levelplayingfield.”Certaincompetitorshavehadbigadvantagesoverourgroup;recenteventsmakeitclearthatthisinequityiscomingtoanend.Icongratulatethosedepartmentsforthejobtheyhavedoneagainstunethicalcompetition.
Youmayhavealsoreadthearticlesaboutalargefirmthatisdeemphasizingarbitragingactivities.WeatBearStearnsareactivelyexpandingthepersonnelandthecapitalcommitmentsofourriskarbitragedepartment.Ihaveneverbeenmorepositiveaboutriskarbitrage.Itwillamazemeifthisdecisiondoesnotprovecorrect.
Thatisthegoodnews.ThebadnewsiswearedoingsowellthatIamsure,subconsciously,wearebecomingcomplacent.ItisthejoboftheExecutiveCommitteetoonceagainstressthefundamentalsofHaimchinkelMalintzAnaynikal.Youshouldknowwhattheyarebynow,andifyoudonotknow,youareatthewrongfirm.Becauseofthetremendousactivityinallphasesofourbusiness,everyconmanisorwillbeheadingforthesecuritiesindustry.Stayalert!Andonceagainreinforcewithourassociatestheneedtoreportanythingunusualnomatterhowtrivial.
*Whateverthefiguresare,theywouldbeevenbetterifmyassociatesreadandrereadmymemosonexpenses,butnobodypaysattentiontomesincethestockisabove20.
MemoFROMTHEDESKOFALANC.GREENBERG
DateMarch9,1987ToManagingDirectors&AssociateDirectorsFromAlanC.GreenbergCCSubject
Itisofficial!Wehavesignedaleasetomoveto46thandParkAvenue.IhopethatallofyouareasexcitedaboutthismoveastheExecutiveCommitteeis.Inouropinion,thismoveushersinawholenewdimensiontoourgrowth.
Iwouldliketotakethistimetoassureyouthatourbasiccultureisnotgoingtochange.Eventhoughwewillhavemorespaceandmorepeople,wecertainlywillnotaddanyadditionallayersofmanagement.Ourpointofviewonexpensesandthebottomlinewillnotchange.Ourpretaxmarginswere26.6%forthefirst9monthsofthisyearandarethehighestintheindustry.Iamsorrytoreportthatforthesameperiodourreturnonequitywas25%andranksonly2ndintheindustry.ThisrankingofourR.O.E.isdisappointingtomeandparticularlytoHaimchinkelMalintzAnaynikal.Weareobviouslydoingsomethingwrong.Letusallsetaboutcorrectingit.
TheonlystatisticIcareaboutisreturnonequity.Aftermanysessionswithsomeofourbusinessschoolgraduates(yes,wedohavesome),IthinktheyhavehelpedmeunderstandthesecrettoimprovingourR.O.E.Itseemsthatifweincreaserevenuesandcutexpenses,returnonequitygoesupandthatiswhatmakesmehappy.Pleasemakemehappy!IcanbeveryunpleasantwhenI’mnot.
MemoFROMTHEDESKOFALANC.GREENBERG
DateApril30,1987ToALLEMPLOYEESFromAlanC.GreenbergCC
SubjectPHONEMANNER
Thisladymusthavereadsomeofourmemos.PleasereadwhatshehastosayandletustrytoimplementitineverynookandcrannyofBearStearns.
‘Phonedoctor’hasanRxfortelerudenessByCindyRichards
Thefederalbudgetdeficit,internationaltradegapandunstablestockmarketmay grab the headlines, but Nancy Friedman says the biggest problemfacingbusinesstodayisrudeness.
“The sales department just bleeds when people are treated badly,” saidFriedman,whobillsherselfastheTelephoneDoctor.
Inseminarsconductedforcompaniesacross thecountry,Friedmanteachesemployeestobenicetofolksonthephone.
“Idon’tknowthatwe’reshowinganybodyanythingterriblynew,”Friedmansaid in a telephone interview last week. But, she noted, just becauseemployeesknow theyshould treatcallerswelldoesn’tmean they’redoingit.mmTake“emotionalleakage,”forexample.That’swhentheemployeeisupsetaboutsomethingelseandtakesitoutonthecaller.Beforeansweringthephoneinabadmood,Friedmansuggestslettingitringonemoretime—long enough to dredge up a smile. “A phony smile is better than a realfrown,”theenergeticFriedmansays.
ThenthereareFriedman’s“fiveforbiddenphrases.”
•“Idon’tknow.”Itshouldbereplacedwith“Letmecheckandfindout.”
•“Wecan’tdothat.”Instead,tellcallerswhatcanbedone.
•“You’ll have to . . .” The caller doesn’t have to do much of anything,certainly not sit on hold. Instead, the employee should say, “You’ll needto...”
•“Hangonasecond,I’llberightback.” It’sa lieandshouldbereplacedwith “I’ll need to put you on hold for a fewmoments, if you are able tohold.”
•“No.” It should no longer appear at the beginning of a sentence. Thatmakespeoplethinkaboutwhatthey’resayingbeforetheystarttalking.
ToFriedman,politeuseofthetelephoneisnotjustabusiness,it’sacrusade.In her quest to stamp out phone rudeness, she is offering a supply of“telephoneviolation”and“telephonecommendation”noticesfreetoanyone.The notices are to be sent to the boss of the person to be reprimanded orcommanded.Theymaybeobtainedbywriting theTelephoneDoctor,P.O.Box777,St.Louis,Mo.63044.
(fromtheChicagoSun-Times)
MemoFROMTHEDESKOFALANC.GREENBERG
DateMay26,1987ToMANAGINGDIRECTORSANDASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject
Thecoverstoryinlastweek’sTimeMagazinewasonethics.Mostofwhattheysaidwasnonsense,butthemagazinedidmakeapointofsayingthatoneoftheproblemsofdetectingfraudor“nauties”incorporationsisthatemployeesofmostcompaniesareafraidtorocktheboatbyreportingaberrationsorsuspiciousactions.
Ithinkthatitistimeonceagaintostressthatwethinkallofourpeoplearehonest,andtheyareevenmorehonestwhenthey(includingthemembersoftheExecutiveCommittee)knowtheyarebeingwatchedlikeahawkbyeveryoneinourorganization.Asyouknow,weevenrewardpeoplewithcashbonusesifasuspicionissubstantiated.
Letusrestatetoourassociatesthattheyareourfirstlineofdefenseagainstfraudandwaste.Weneedtheircooperationtostaypure,andwewillrewardthemiftheydiscoveranindiscretion.Wewillalsonevercriticizeanyoneforcalling“wolf”toooften.
Wearedifferentfromothercorporations.Letusstaythatway.
MemoFROMTHEDESKOFALANC.GREENBERG
DATE:June18,1987TO:ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Themoreyoureadaboutourcompetitors’problems,themoreyourealizewhatajobourpeopledidinthemonthofApril.
Themediaareconsistent.TheyseemtoprintonlynegativesaboutBearStearns.OurearningsfortheyearandquarterendingApril30,1987weregiventothenewspapers,andwestressedinourreleasethatthemonthofAprilwasplentyvolatile,butwedidfine.
Itishardnottogetupsetwhenyouseeourstockbehaveasithas,butIcanassureyouthatifourrecordcontinues,ourmultiplewillincreasedramatically.Myguaranteemaynotmeanmuch,butHaimchinkelMalintzAnaynikalagrees,andthatdoesmeansomething.
Ifwecontinuetoearn50%onourequity(pre-tax),someMBAwillrecognizeus,andthenwemayevensellatninetimesearnings.
Wearedoinggreat!Justkeepitupandleavethepriceofthestocktome.
MemoFROMTHEDESKOFALANC.GREENBERG
DateJuly13,1987ToALLMANAGINGDIRECTORSFromTHEEXECUTIVECOMMITTEECC
SubjectCOSTCONTROLANDOVERALLEFFICIENCY
BearStearnshasrecentlyannouncedarecordyear—aperiodduringwhichsomeofthemajorsinourindustryhadproblemsincertainareasthataffectedadverselytheirP&L.Wemaybeentitledtosomedegreeofprideinourperformance,butcertainlynotsmugself-satisfaction.
Whileourcost/revenueratiosappeartobereasonablysatisfactory,nowisthetimetopauseandremindourselvesthat:1)Wehaveexpandedrapidly,adding800employeesduringFY1987alone;
2)Themoveto245ParkAvenuewillincreasesignificantlyourfixedexpenses;3)Ourindustryiscyclical,andweareinthemidstofthelongestbullmarketinhistory;
4)Asharpdownturncouldbepainfulifwearenotleanandmean;5)Manyofusgetpaidprimarilyoutofbonuspoolprofits;and,6)Inevitablyfatcreepsinwithexpansionandprosperity.Consequently,wewantallManagingDirectorstobegincriticallyexamining
theirareas.Hereisalistofsomeofthethingsyoushouldbereviewing:A.Yourworkforce
1.Whoisnotsufficientlyproductive?2.Whoshouldbereplaced?3.Whoshouldbeeliminatedandneednotbereplaced?4.Beforehiringanyonenew,askwhetheryourexistingstaffcanbeassignedadditionalresponsibilities.
5.Doyouhaveemployeesperformingfunctionsthatareduplicatingthoseperformedinotherdepartments,suchasAccountingorDataProcessing?
B.Otheritemstowatchanddothatwillkeepusneat&clean.1.Areyoupayingforunusedoruneconomicnewsorquotationservices?2.Areyoupayingoutsidevendorsforservicesormaterialthatarenotreallyneeded,orduplicatewhatisalreadyavailablein-house?
3.Doyouhavetoomanytelephonesandunderutilizedfixedwires?4.AreyoucontrollingsuchthingsasFederalExpress,messengerservices,andpersonallong-distancecalls?
5.Doyou&yourassociatesrereaddailymymajormemosonrubberbands,paperclipsandenveloperecycling(Ifeelthatadheringtothosememoswasthemainreasonlastyearwasasuccess).
BearStearnshasgrownandprosperedbecausecapable,aggressive,money-motivatedpeopleworkedhard,weregivensubstantialresponsibility,andwatchedtheirbusinessesandeachother.Thebiggestchallengeisyettocome—startgettingreadyNOW.
Ifyoudon’tdoit—wewillhavetodoitforyouandthatwillbelesspleasantandlessefficient.Thisplaceisnotgoingtosmelllikeabureaucracy—bureaucraciesdon’tsetrecords.Weown60%ofthisplace—let’skeepitsoundandmakeitgrow.Ourcompensationisbasedonthefirm’sprofitability.Inaddition,Iamnewlymarried,andIaminnomoodtotakeapaycut.Regardlessofwhatyourexperiencehasbeen,Iamfindingthattwocannotliveascheaplyasone.
MemoFROMTHEDESKOFALANC.GREENBERG
DateAugust21,1987ToMANAGINGDIRECTORSANDASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject
BearStearnsisnothavingahiringfreeze.Ourexperiencehasbeenthatthebesttimetohireproductivepeopleiswhenconditionsaredifficult.SomeareasofWallStreetarehavingproblemsandthatmeansopportunityisonceagainknockingatourdoor.Letusallbealertandcontinuetobuild!
Iwouldliketoannounceatthistimeafreezeonexpensesandcarelessness.Weprobablythrowawaymillionseveryyearwithstupiditiesandslop.Infact,Ihaveseenmoreslopinthelastthreeweeksthanintheprevioussixmonths.Stopitnow.Nobusinessisstrongenoughtowithstandconstantstupidity.
HaimchinkelMalintzAnaynikalisreallysomething.JusttakealookatmyJune13,1987memoandseeonceagainhowrighthewas.Hehatesslop,evenmorethanIdo.Infact,hepointedouttomewhereourstockcouldbeifwerananeat,tightshop.Iamtiredofcleaninguppoo-poos.Thenextassociateofminethatdoessomething“un-neat”isgoingtohavealittlemeetingwithmeandIwillnotbetheusualcharming,sweet,understanding,pleasant,entertaining,affableyokelfromOklahoma.
MemoFROMTHEDESKOFALANC.GREENBERG
DateOctober16,1987ToMANAGINGDIRECTORS&ASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject
OvertheyearsHaimchinkelMalintzAnaynikalhasstressed:
1.HirePSD’s.*2.Makedecisionsbasedoncommonsenseandavoidtheherdmentality.3.Controlexpenseswithunrelentingvigil,becauseifyouturnyourbackforasecondtheywillgrowlikeweeds.
4.Helpalldepartmentstogrow,becausethisyear’sstarletcanbenextyear’sdog.
5.Bewareofcatchyphrases—suchas“MerchantBanking.”HaimchinkelMalintzAnaynikalknewIwasnotclearonwhatMerchantBankingis,sohedefineditforme.“MerchantBankingisbuyingstockinacompanywhosesharesarenotpubliclytradedandthecompanyshouldbeinabusinessverydifferentfromwhatyouarefamiliarwith.”
Imagine,allthistimeIthoughtMerchantBankingwassomeesoteric,complicatedBritishsecret.
HaimchinkelMalintzAnaynikal’sguidesmayseemsimplistic,butwhydon’twegivethematry?
*ForthoseofyouwhoarenewtoBearStearns,PSDstandsforpoor,smartandadeepdesiretobecomerich.PleasedonotinferfromthisthatHaimchinkelMalintzAnaynikalisprejudicedagainstpeoplewhopossessotheralmostworthlessdegrees.Heisnotnordoesheteachotherstobe.
MemoFROMTHEDESKOFALANC.GREENBERG
DateOctober19,1987ToMANAGING&ASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject
Itisamazinghowhistorykeepsrepeatingitself.Themarketinstocksandbondshastakenaprecipitousdrop,butIamfarfromdepressed.Why?Becauseonceagainweareseeingandwewillbeseeinggreatopportunitiesinallareas,particularlyinpersonnel.Icanassureyouwearepursuingeveryleadatthisverymoment.
OurmovetoParkAvenuewillstartshortly,andItrulybelievethatthetimingisperfect.Justkeepinminditwasjustafewyearsagothattwoofourcompetitorslefttheclearingbusiness.ElevenmonthsagoseverallargefirmsclosedtheirArbitrageDepartments.*Wewillbeawinner.
Amarketlikethisdoesbringouttheworstinpeople.Theenclosedviciousrumorwassenttothemedialastweek.YourExecutiveCommitteeknewimmediatelythatitwasfalse,becauseHaimchinkelMalintzAnaynikalcertainlywouldhaveleftahugenumberofrubberbandsandoldenvelopesinhisestate.Itislogical,quickthinkinglikethisbyyourleadersthatensuresourfirm’ssuccess.
*IwishourArbitrageDepartmenthadcloseddownforatwo-weekfallvacationfourteendaysago.
HAIMCHINKELM.ANAYNIKALDIESOFACUTEOVEREXPOSURE
NewYork,N.Y.—Mr.HaimchinkelMalintzAnaynikaldiedlastnight—avictimofacuteoverexposure.
ThecontroversialBearStearnsconsultantissurvivedbyhisformerwife,fromwhomhewasdivorcedthedayafterhismarriagethirtyyearsago.“Thattightwadwantedmetopayhalfthehotelbillonourhoneymoon,”shelamented.
Mr.Anaynikalleftanestateof5,475,000paperclips,andagiganticballofstring,whichalmostcompletelyoccupiedabedroominhissparseloftapartment.
Actingasthesolehonorarypallbearer,andtheonlymournerathisfuneral,wasBearStearnschairmanAlan“Ace”Greenberg.Mr.Greenberg,sobbinguncontrollably,couldonlysay,“Ican’tbelieveHaimchinkelisdead.Whatwillbecomeofme.Idon’tknowhowIcangoonwithouthim.”
MemoFROMTHEDESKOFALANC.GREENBERG
DateNovember3,1987ToALLREGISTEREDREPRESENTATIVESFromALANC.GREENBERGCCSubject
EnclosedisamemothatKathrynEsteyoftheChicagoofficesenttome.ItwasdictatedbymeanddistributedinJulyof1984.Whenyoureadit,you’llrealizehowtimeshavechanged.Theonethingthathasn’tchangedistheservicesthatIhopeallRegisteredRepresentativesgetfromthestaff.
ThesehavebeentoughtimesfortheOperationsDepartment,butthingsaregettingbacktonormalandIstillwantyoutofeelfreetocallmeanytimeyoufeeltheserviceislessthanTripleA.
Wehavecomethroughatoughperiod,butbelieveme,yourfirmisstrongernowintermsofpersonnelthanitwasonemonthago,andwearestillgrowing.
MemoFROMTHEDESKOFALANC.GREENBERG
DateNovember16,1987ToManagingDirectorsandAssociateDirectorsFromALANC.GREENBERGCCSubject
Oursecondquarterjustendedandtheresultsareamatterofrecord.ThemonthofOctoberwillneverbeforgottenbyanyofusorbyhistorians.
Thepressurewastremendousoneveryonewhohadanythingtodowithequities,andinalmosteverycaseourpeoplecamethroughbeautifully.Iwouldliketothankthemallpersonally,butthatisimpossible.Butitispossibleforyoutodoitforme.PleaseletthepeopleyouworkwithknowhowIfeelaboutthem.
Thefirmweatheredthestormalmostunscathed,butourstockholderswerehurtnotonlybythe32%dropinthestockmarketbutalsobythewithdrawaloftheJardineoffer—adoubledisappointment.ItisourjobtomakethemonthofOctoberlookinretrospectlikeablessingindisguiseforBearStearns.Iknowthisappearstobeatoughassignment,butwearemakingthemovesnowthatmakethispossible.Wewilldoit!
TheJardinecancellationaffectedmeinadifferentway.HaimchinkelMalintzAnaynikalsuggestedandIagreedtodropoutofmygrouse-shootingclass.Itjustwasnotme.ItookonelessonandtheonlythingIlearnedwasthatthepluralofgrouseisgreese.HaimchinkelMalintzAnaynikalfailedtoseehowthatkindofknowledgewouldnowbeofgreataidtomycareer.
MemoFROMTHEDESKOFALANC.GREENBERG
DateNovember24,1987ToManagingDirectors&AssociateDirectorsFromALANC.GREENBERGCCSubject
ThemoveoftheNewYorkOfficehasstarted!
Ifyouhavenotseentheinteriorof245ParkAvenueyet,youhavearealtreatinstore.TheCorporateFinanceandM&ADepartmentsarenowinoperationat46thandPark.Therestofuswillbemovingshortly,andItrulybelievethatourtimingisperfect.
Thenewspapershavebeenfullofnewsaboutlayoffsineveryareaofourindustry,andtherewillbeplentyofadditionalfalloutifE.F.HuttonistakenoverbyanotherWallStreetfirm.Wenowhavethespaceandtheappetitetohirepeopleiftheyhaveoutstandingability.Ournewlocationwillmakeusanevenmoredesirableplacetowork.
Whyarewehiringinsteadoffiring?MaybeitisbecausewefollowedtheteachingsofHaimchinkelMalintzAnaynikalwhenothersscoffed.Ratherthantestfate,yourExecutiveCommitteehasagreedtogoalongwithHaimchinkelMalintzAnaynikal’slatestsuggestion.Becauseofourpastgrowthandouranticipatedgrowth,wehavereluctantlydecidedtoadaptsomemodernmanagementtechniquessuggestedbyHaimchinkelMalintzAnaynikal.
WewillshortlysetupagroupdevotedonlytoBackwardPlanning.Thismaysurprisesomeofyou,butlookdeeperandyouwilldiscoverthelogicbehindthismove.Justexaminetherecordsofthosecompaniesthathadpersonneldevotedtostrategicorforwardplanning,andyouwillfigureoutthisinitialplungebyusintoamorestructuredcorporateenvironment.
Thecompositionofthisgrouphasnotbeenfinalized,butsuchthingsasnotreturningtelephonecalls,havingasecretarywhoanswerscallswiththe
enthusiasmofawetnoodle,beinglatetoclientmeetingsandjustbeing“notneatandtidy”certainlyarethethingswewillbelookingforinacandidatefortheBackwardPlanningCommittee.
MemoFROMTHEDESKOFALANC.GREENBERG
DateFebruary3,1988ToAllDirectorsofBearStearns;ManagingDirectorsandAssociateDirectorsFromAlanC.GreenbergCCSubject
OurmovetoParkAvenueisalmostcomplete.AsfarasIamconcerned,itwentlikeadreamandthefirstmonth(January)wasarealpleasure.
IfJanuaryisanyindicationofthefuture,wearegoingtohavesomerealfun.
Firmsinourindustrycontinuetobeshakenbyinternalproblems*andweremainfreefromthispoison.OneofthemainjobsofyourExecutiveCommitteeistokeepitthatway.Thefirmisridinghighnowandeveryonewhoworksherecanfeelit(wearehiring—theyarefiring).HaimchinkelMalintzAnaynikalhaswarnedusonceagainthattheonlythingthatcanstopourmomentumisinternalstrife,conceitandcomplacency.WewillnotletithappenatBearStearns!Wehavecometoofartoturnstupid.
Everybody’sdoinggreat.Keepitupandmakemericher.
*ItwasjustannouncedthatsomeprominentpeopleinM&Ajustleftafirmbecauseofadifferenceofopinionoverstrategicplanning.AnissuelikethatcouldneverariseatBearStearnsbecausewehavenostrategicplanning.Onceagain,HaimchinkelMalintzAnaynikalcomesoutasonesmartdude.RememberhisAxiom1023?“Theamountofdissensionrisesgeometricallywiththemoreissuesyouhavetophilosophizeover.”
MemoFROMTHEDESKOFALANC.GREENBERG
DateApril12,1988ToAllSeniorManagingDirectors,ManagingDirectors,andAssociate
DirectorsFromAlanC.GreenbergCCSubject
Intwoweeksourfiscalyearwillend,butIcanassureyouthememorywilllingeron.
Itwasayearthatmadeusrealizehowfragilethemarketscanbeandthatwecanneverlowerourguard.
Theyearalsoshowedushowexpensivelitigationcanbe—evenwhenweareright!Whatistheanswer?Wemustbecareful,suspiciousandalwaysrespectourin-houseadministratorsandcompliancepeople.Itisimpossibletomakeenoughonatradeoradealtojustifysubsequentlitigationduetocarelessnessorgreed.
Thepositivesoflastyearweremany.Weshowedremarkablecomposureandtheabilitytoreboundunderpressure.EverydepartmentusedOctober19,1987asanopportunitytoattracttoppeople.WearetheonlyinvestmentbankingfirmIknowofthatishiringandnotfiring(5,715employeesayearagoversus6,036today).Thishascausedthemoraleofourassociatestobeatanall-timehigh.Theyearalsoshowedourtremendousearningpowerevenwhenthemarkethadarecordbreak.
Idohaveonesaditemtoreport.HaimchinkelMalintzAnaynikalwillnolongerserveasaconsultantonaregularbasis.Aftertenyearsofmybadgeringhim,heisjustplaintired;butwewillnotbewhollyonourown.Hewillbeavailableforspecialproblems,andwewillbeabletotalktohisnephew,ItzhakNanook*Pumpernickanaylian,onmundanesubjects.
ThebottomlineisIhaveneverfeltmoreoptimisticaboutourfutureormoreeagertocometoworkinthemorning.Ihopeyoufeelthesame.
*Remember,HaimchinkelMalintzAnaynikal’smotherwasanEskimo.
MemoFROMTHEDESKOFALANC.GREENBERG
DateApril15,1988ToAllEmployeesFromAlanC.GreenbergCCSubject
ItzhakNanookPumpernickanaylianisinharnessandrunning,andhehascomeupwithhisfirstbrilliancy.
Whilegoingthroughournewquarters(hewasonacamel),hepointedouttomethatwehave2,600piecesofreturnedmailsittinginaroomat245ParkAvenue.Whyisthis?Thesepiecesofmail,someofwhichmaybeveryimportant,werereturnedtousbecauseofwrongaddresses,butthesendersdidnotputanyidentificationintheupperleft-handcorneroftheenvelopes.Atthistimewehavebeenunabletofindthesenders.WehaveretainedSherlockSchwartz,butthiscaseistoomuchevenforhim.
Effectivetodaywehaveanewpolicy.Infact,weshouldhavehaditforthepast10years.NothinggoesoutofBearStearnswithoutthesender’sidentifyingmarkintheupperleft-handcornerofeachenvelope.Thiswillsaveustime,moneyandaggravation.Ifyouaretoobusytodothis,pleasecallme.Iwillbegladtocomedownandputtheproperidentificationonyourmail.
1988–1991
Octoberof1987wasatoughmonth,butthethreeandahalfyearsthatfollowedwerearealtestoftheviabilityofafirminthebrokerageindustry.Fourprominentfirms(L.F.Rothschild,DrexelBurnhamLambert,ThomsonMcKinnonandE.F.Hutton)disappeared,andfourequallyprominenthouseswouldhaveexitediftheirparentshadnotcometotherescuewith$3½billion.Threeandahalfbilliondollars—thefigureismind-boggling.
DuringthatperiodBearStearnscontinuedtoprosper,andwebelievewearenowinthestrongestpositioninourhistory—strongfinanciallyandstronginallareasinwhichwecompete.
Howdidweresistsomeofthewildthingsourcompetitorsweredoingthatmaderealinroadsintoourmarketshare?Howdidwekeepourassociatesinplacewhentransactionstheybroughtinwerelosttootherfirmsthatwerewillingtodothingswewerenotwillingtodo?Howandwhydidweresistthebridgeloanmania?Itwasnoteasy.Attimeswewerequestionedbyourownpeopleastowhetherwewereoutoftouchwiththerealworld.Andtherewereoccasionswhenevenwedoubtedtheprincipleswesostubbornlymaintained.Maybethesememoscangiveyousomeinsightonhowwemanagedtokeepourequilibrium,andinsodoing,howwemanagedtogreatlyimproveourpositioninourindustry.
AllofusatBearStearnsarelookingforwardtothefuture.Wethinkwearepoisedtomakeanevenbiggerimpactintheworldoffinance.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateJune20,1988ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromALANC.GREENBERGCCSubject
ItzhakNanookPumpernickanaylian(hismothercallshimNookie**)hasobservedthatournewfiscalyeardidnotexactlystartduringaveryimpressivemonthforourindustry.
Myguessisthatwearedoingbetterthanmostofourcompetitors,butthatdoesnotmakemehappy.Nookie’sonlyadvicewastoimploreallofustoworkharder.Conditionsdochangequicklyinthisbusiness,andifwearedoingokaywhenthingsaretough,wewillbreakrecordswhenthemarketturns.
Nookiealsomadethecommentthat“theharderyouwork,theluckieryouget.”Thisthoughtisneitheroriginalnornew,butitistrueandwecanalluseluck.
Keepyourchinsup,wearegoingintherightdirection.
*HaimchinkelMalintzAnaynikaltriedtoexplaintoMrs.PumpernickanaylianthatNookiewasnotconsideredaparticularlyflatteringnicknameinsomecircles;soshestartedcallinghersonNofkee.HaimchinkelimmediatelyaskedhertoswitchbacktoNookie.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateAugust30,1988ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Nookiesentamessagetousthatmaysoundtritebutstillbearsrepeating.
“Thebusinessyouareinisjustplaindifficultatthistime.Whenyouenteredtheindustry,youwerewarnedthatitwascyclicalbutbullmarketstendtocloudrealism.Youarenowinaperiodthatseparatesthemenfromtheboys.
Mrs.HaimchinkelMalintzAnaynikalsuggeststhatwhenthegoinggetstough—goshopping!
AcertainofficerofBearStearnssuggeststhatwhenthegoinggetstough—startsellingpositions!
Mysuggestionisthatwhenthegoinggetstough—thetoughgetgoing!
Youhavenooptionbuttofollowmysuggestion.Ifyoudo,youwillprosperbeyondyourwildestdreamswhenthemarketturns—anditwill.
Youradvisor,juniorgradeItzhakNanookPumpernickanaylian”
Thereisnotmuchtoadd.Wewillbeoneofthesurvivorsandthepeoplethatstickwithuswillprospermightily.Thenextbullmarketcouldstartanydayandthestrongwillstillbehereforthefun.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateOctober4,1988ToAllSeniorManagingDirectorsFromAlanC.GreenbergCC
SubjectAFieldReportfromItzhakNanookPumpernickanaylian
HaimchinkelMalintzAnaynikalhostedafamilygatheringonOctober3rd.ThisisanannualpartycelebratingthemostimportantofallEskimoholidays(remember,HaimchinkelMalintzAnaynikal’smotherwasanEskimo).Itwas82yearsagothattheEskimoPiewasinvented,soyoucanseewhypeopleupnorthrankthisdayjustaheadofthefeastcelebratingtheinventionoftheharpoon.*
ItisreportedtomebyNookiethatHaimchinkelMalintzAnaynikalisveryoptimisticonWallStreet.Why?Becausehepointedoutthatbigmoneyisusuallymadebycontrariansandatthemomenttheworldisdownonourindustry.
Ifyouthinkback,youwilldiscoverthatourbestmovesweremadeagainstthethinkingofthemasses.Itrulybelievethatnowisthetimetoenterthesecuritiesbusiness—notthetimetoleave—butitisuptoustobeleaders.Itisnoteasytobeupwhenyourareaoftheindustryisdown50%,butitwillturnandwemustandwillhelptheweaksurvivethisperiod.
Itisincumbentuponusthatwekeepourpeoplefromthinkingthegrassisgreenersomewhereelse.Itisincumbentuponustorecognizewhoneedshelp.Itisincumbentuponustostressthatthecontrarianpointofviewistheintelligentcourse.
Thebottomlineis:thereisnosubstituteforleadership.NowisthetimetodemonstratewhatIknowwehave.
*SomeoftheyoungmaleMoes(shortforEskimos)particularlyliketheFeastofHarpoonbecausefora24-hourperiodyouareallowedtospearanythinginsight.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateOctober26,1988ToSr.ManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Electricityisnotfree!Thiswillcomeasacompletesurpriseto98%ofthepeoplewhoworkatBearStearns.WhyamIsosure?Nookie*tookalittlewalkaroundourofficesoneeveningandfoundenoughlightsandmachinesontofundBangladesh’slightbillforayear.
Ihaveneverenjoyedthesmellofmoneyburning,particularlywhenitismymoney.Thecarelesswastingofelectricityisburningmoney.(Ourelectricalbillisrunningattherateoffivemillionayear.)
Fromthisdayonwehavetworevolutionarynewrules.Turnofflightswhenyouleavearoomandturnoffequipmentwhenyoucallitaday.Withconcentration,dedicationandmuscularcoordinationwecandoit!Nookie*suggestedwehireatherapisttohelpourassociateshandlethismajorjobadjustment,butIthinkheunderestimatesourpeople.Provemerightoritisofftotherapysessions.
*IfyoudonotknowwhoNookieisbynow,youareatthewrongfirm.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateNovember9,1988ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Octoberwasanexcellentmonth,andNovemberisstartingoffgreat.Ithinkmymemoaboutturningofflightshadalottodowiththeprofitabilityofthelastfortydays.Ourprofitswouldhavebeenevenhigherifourpeoplehadrespondedwithmoreenthusiasmtomyrequestsaboutcuttingdownourelectricalbill.
IwilltakepartoftheblameforlackoftotalcompliancebecauseIdidnotrealizethecomplexitiesinvolved.Ourstaffdidwellinturningoffswitchesthatwereonaverticalplane,butswitchesthatwereonahorizontalplaneseemedtocausemajorproblems.
Nookie*explainedthereasonforthistome.AlthoughmostofusareP.S.D.’s,*westillliveinhomeswithelectricityandtheswitchesforroomlightsareonthewalls,notthefloors.Pleasefilethisfact.Ourassociatesperformedmiserablyinturningofftheelectronicmachines.Canyoufigureoutwhy?Nookieknewatonce.Letmehelpyou.Alltheswitchesfortheseapparatusesareonahorizontalplane.Ourgroupcouldnotadjust!Pleasehaveseminarsinyourareasexplaininghowtheseswitcheswork.Ouralternativeistohavetheswitchesonallthemachineschangedtoaverticalposition.Thiswouldcost$8,492,212.00.YourExecutiveCommitteethinkswithyourhelpourstaffcanadjust.
Icannotstandtoseeourmoneybeingburnt.Stopallwaste!
*IfyoudonotknowwhoNookieisorwhataP.S.D.is,donotreadanyfurther.Youwillneverunderstandthetextthatfollows.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateDecember20,1988ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Wearegoingthroughoneofthoseperiods.Somedepartmentsarebreakingrecordsanditappearsthateverythingtheytouchturnstogold.Wehavebeenaroundlongenoughtoknowtwothings.
1.Everycathousehasitsnight.Thosedepartmentsthatarehavingproblemsatthemomentwillhavetheirdayinthesun,butuntilthenourjobistokeepmoraleupandthepeopleinplace.
2.Thoseareasthatarecoiningmoneywillhaveatendencytogetoverconfidentandalittlelooseand/orforgetfulofthefundamentalsthatbuiltthisplace.
ThatiswhereourP.S.D.degreescomeintoplay.Wearegoingtostress,reinforceandbecomejustplainobnoxiousaboutstoppingoverconfidenceandconceit.Whenthepartyendsinthesehotareas,IdonotwanttheExecutiveCommitteetohavetodoclean-upduty.Wemustkeepourassociates’feetontheground.ThepartywillendandIwanttogivebacktheabsoluteminimum.
OursecondquarterwillbeoverinaweekandIthankallofyouforalovelyChristmaspresent.Iwillsaynomore.
Hope1989isgoodtoallofus!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateJanuary13,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
YouhaveallseentheresultsofthelastquarterandImustadmittheywerespectacularconsideringthepresentenvironment.
ThePressdoesnotknowhowsensationalthemonthofDecemberwas.Agolferwouldcallthemonth“adoubleeagle.”Wehavehadbigmonthsinthepastandtheywerealwaystheresultofalldepartmentscontributing.TheresultsofDecemberwereachievedwithmanydepartmentsnotcontributingbecauseofindustryconditionsbeyondtheircontrol.
NookiethinksthatthebusinesscouldhaveanupturnandwhenthathappensIcanonlydreamofthejoyinstoreforus.
AnegativenotethatcontinuestoshowitsuglyheadisthatourErrorAccountcontinuesonitsmerryway.Wehadonebighitlastweekandoneveryclosecallthatmissedusonlybecauseofluck—notbrains.Onceagainwehavetoemphasizetoeveryoneonourpay-rollthatsystemsandproceduresarebetterthannothingbutthereisnosubstituteforusingone’shead.
Pleasereemphasizethatwerewardonthespotpeoplewhoshowbrainswithcashand/orapromotionwhentheyusetheirheads.
OneofNookie’smaintenetsisthat“fishstinkfromthehead.”Ifthemanagementgivestheappearanceofbeingalertandsuspicious,thepeopleunderyouwillactaccordingly;soourtaskissimple.Besmart,actsmart,bealert,besuspicious,andonguard!
Theonlythingthatcanstopusfromgettingricherisstupidity.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateApril7,1989ToSr.ManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
WehavehadapolicyforyearswithregardtoanyofusatBearStearnstalkingtothepress.
Theruleissimple.NooneisallowedtotalkonorofftherecordwithouttheapprovalofJimCayneorJohnRosenwald.WhenIsaynooneImeanit,becauseIrespectthisruleandifIdo,youwill.Thisruleobviouslyincludeslettingyournameappearinanybusiness-relatedarticleoradvertisement.Pleasebesurethateverybodyyouworkwithunderstandsthisloudandclear.
Aslongaswearediscussingvocalcords,ItzhakNanookPumpernickanaylianpointedouttomethatIshouldalsostressourpolicyondiscussingwhatotherfirmsinourindustrydo.Wedonotknockthepricingorthestructureoftheofferingsofourcompetitors.Iamwellawarethatotherfirmshavenotbeensoconsideratetowardus,butthathasnobearingonhowweconductourselves.
Ourrecordoflatewillprobablycreatesomejealousy,soitismoreimportantthaneverthatweconductourselvesinamannerbeyondreproach.
NookiealsomadeafewcommentsingeneralaboutBearStearns.NookiefeelsthatthemoraleandspiritatBearStearnshasneverbeenbetter,andthefuturehasneverlookedbrighter.Iagreemostemphatically.Nookiedisclosedthathebasedhisconclusionsonspotinterviewsandpersonalobservations.Ifyouareveryobservant,youmayhavenoticedsomebodyinArabgarbwalkingaroundthepremisesconstantlylickinganeskimopie**andusingawalrusphallus*foratoothpick.Youkeenonesmayhaveguessedit—thatwasNookieinhisspyoutfit.
*YounewassociatesmaynotbeawareofNookie’sheritage.Onhismother’smaternalside,hisgrandmotherwasanEskimoandhisgrandfatherwasanIranian.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateApril18,1989ToSr.ManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
SometimeagoweinformedthepeopleatBearStearnsthatnolegalbusiness,printingbusiness,plumbingbusinessoranythingelsethatBearStearnspaysforcanbeassignedwithouttheapprovalofDavidGlaser(x3763)orRichardDeRose(x3767).
Imadeaterriblemistake.IdidnotremindyouofthiseverythreemonthsasIshouldhave;soIamremindingyounow.Ifyoubiteadogandneedalawyer,youcanhireonewithoutourpermission.IfyouexpectBearStearnstopayalegalbill,youhadbettergetthepermissionofoneofthesemenImentionedoryouwillenduppayingthebillyourself.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateMay9,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
ThemediahavebeenfullofarticlesaboutWallStreetandtheproblemsofourindustry.Thewritersquotethesamesagestheyhaveinthepast.Thearticlesfailtomentionthepropheticalrecordoftheseluminaries—theirrecordislousy.
ItwasjustashorttimeagothatweweretoldaWallStreetfirmhadtobepartofahugefinancialcolossus(Equitable,Metropolitan,Prudential,Sears,etc.)tosurvive.Wearenowbeingtoldthatitistheboutiquesthatwillprosper.
NookiePookie*thinksthatourstructureisperfectandIagree.Firmswithanextensiveretailbranchsystemwillhaveaheadacheformanyyears,butourstyleofhavingonlysixdomesticbrancheswithin-housecapabilityinmanyareasisprovingtobethewisewaytoincorporateretailintothesystem.Wearetotallycommittedtotheretailbusiness,butinourway.Allofourofficesanddepartments,includingretail,arepoisedtomakemajorcontributionstoourprofitability.
Ourrecordoflateisnotanaccident.Whenthemarketsturnoptimisticandvolumereturns,wewillsetnewrecordsintheareaIlike—netaftertaxes.
NookiePookie*didpointoutonethingthewirehouseshavethatweshouldtrytobuy—theirP/Emultiples.
*Thisistheaffectionatewayheisaddressedbyhiswife,Pastrami.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateJune9,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Ihadadream.ThedreamwasthatIreturnedtothisworldasaselleroffaxmachinesandIhadBearStearnsasanaccount.Weareorderingfaxmachinesaroundhereliketheyarebeinggivenaway—andtheyarenot!
Wehadastudydoneoffaxmachinesandithasbeenprovenconclusivelythatthemachinesdonotobjecttodifferentpeopleusingthem.Thismeansthatitispossibleforpeopleanddepartmentstoshareintheuseoftheseinanimateobjects.
Beforeyouoryourassociatesrequestanothermachine,pleaseexploresharingormovingamachinewealreadyownclosertoyourarea.
ThisideaisagoodoneandIcansaythatbecauseitwasnotmine.ItcamefromNookie’swife*andsister-in-law.Commonsenseseemstoflowintheveinsofthatgroup.
*YourememberhiswifePastrami.SheishalfofthefamousMeeskeittwins—SalamiandPastrami.TheMeeskeittwinswereconsideredtheirculture’sanswertotheGabors.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateJune15,1989ToALL245PARKAVE.,866U.N.PLAZAand2BROADWAY
EMPLOYEESFromAlanC.GreenbergCC
SubjectCALLINGTHEOPERATORINSTEADOFUSINGTHEDIRECTORY
ItzhakNanookPumpernickanaylianjustcompletedasurveytodeterminewhywecan’tanswerthemainnumber(212-272-2000)inlessthantworingsduringthepeakperiodsinaday.
Guesswhat!Nookiepointedoutthatover50%ofallcallsarecominginfromourownpeople(frominsidethebuilding).Insteadoflookingthenumberupinthedirectory,peoplesimplycalltheoperator.Letmeremindeveryonethatwhileitmayseemalittlemoreconvenienttocalltheoperator,itisalsoimpactingthewaywehandlethecustomersofthefirm.Weshouldbegivingthebestservicetopeoplewhomaygiveusbusiness.
Nookiesuggeststhatyoustartusingyourbrainandstopusingtheoperatorsasadirectory!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateJune30,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
OuryearendedonJune30th.Iwouldsaythelastthreemonthswerebogey,par,eagle!Italwaysfeelsgoodtoendonanup-tickandJunewasapleasure.
Itwouldbeinappropriateformetocommentonthespecificprofitabilityofthequarter(smile,giggle)buttheresultswillbepublicknowledgeverysoon.Itstartedoffslow,butthenwegotlucky—thiswasour44thluckyquarterinarow!
Allofuswhoworkherecanfeeltheexcitementandspiritthatthisfirmisgenerating.Nookie*conductedaconfidentialsurveyatBearStearnsandconcludedthat,onascaleof1to10,themoraleofourpeopleisa12.
SomeofthedecisionswehavemadesinceOctober1987arereallypayingoff.Twoofthebestwere“hiringinsteadoffiring”andexpandingdepartmentsthatotherfirmswereclosingorcontracting.Thesedepartmentsareorareonthevergeofmakingmajorcontributions!
Thepastyearonanabsolutebasiswasgreat,butonarelativebasisitwasspectacular.Ifwesticktothefundamentals(mynextsixmemoswillcoverthatsubject)andkeepourmomentumgoing,wewillbreakallrecords.
IhavejustlearnedthatabankinsouthernAlabamahasbought2,200sharesofBearStearnscommonstock.Thesynergismthatthisassociationcouldgenerateismind-boggling.Howcouldyoubeanythingbutwildlyoptimisticonourfuture?
*Doyourememberbeingqueriedbyalittlemaninapolarbearcoat,galoshesandwearingapithhelmet?Youguessedit,thatwasNookieinhiscamouflageinterviewoutfit.
MEMO
FROMTHEDESKOFALANC.GREENBERG
ToSr.ManagingDirectors,ManagingDirectors,AssociateDirectorsDateJuly17,1989FromAlanC.GreenbergCCSubject
Thein-housetelephoneoperatorsarebeingswampedbyourownassociatesdialingtheBearStearnsoperatorandaskingtobeconnectedtoanotherBearStearnsemployee.AllofushavebeengivenBearStearnsdirectoriesandweshoulddialthenumbersourselves.Thiswillfreeupouroperatorstodoconstructivethingslikeadequatelyservicingclientswhoaretryingtoreachourswitchboard.
Therearetworeasonsthatthedirectoriesarenotbeingused:1.Laziness
2.Notbeingabletoread
Nookiehassuggestedwaystohandlebothpossibilities.Thechiefoperatorwillkeeparecordofemployeeswhoneedconstanthelpfromtheoperators.Ifthosepeopleareliterate,theywillmeetwithme.
Forthoseassociateswhocannotread,wewillhavepeopleoneveryfloorwiththedesignationofH.I.*Ifsomeoneneedshelpinreadingthedirectory,alltheyhavetodoisyell“HI”andhelpwillarrive.Thiswillnotonlyimproveourservice,butcouldalsoincreasethesociallifeofthedumbbells.
Thisformatshouldkilleverycatinthealley.
*CodenameforHelperofIlliterates.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateSEPTEMBER19,1989ToSENIORMANAGINGDIRECTORS,MANAGINGDIRECTORS,
ASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject
SometimeagoItzhakNanookPumpernickanaylianphysicallyrestrainedmefromreleasingamemoIhadwrittenabouttheincreaseofcareless,expensiveerrorsthatwerepoppingupthroughoutthefirm.Theerrorsranthegamutfromfailingtocancelgood-till-cancelorderstoenteringabuyorderwhenitshouldbeasellorder.Thepeopleinvolvedrepresentacrosssectionofthefirm—fromclerkstoseniormanagingdirectors.
Nookie’sreasoningwasthatinthepasteverytimewebroughtupthesubjectoferrorsandpenalties,ourpeoplebecamesonervousthaterrorsincreased.
Thestockmarkethasnotbeenextremelyactiveorfranticlately,buttheerrorsituationhasturnedcriticalduringthelastmonth.ThesizeandfrequencyoftheerrorswouldputadentintheU.S.Mint;soobviouslyitisaluxurywecannotafford.
Fromthisdayonwewillusenewtoolstocombatthisstupidity.Pleaseinformthepeopleyouworkwiththatrestitutionwillbethemildestpenalty.EveryerrorwillbeshowntotheExecutiveCommittee,andtheywilltakeappropriateaction.Wemuststopthisintrusionofourbottomline.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateOCTOBER2,1989ToSENIORMANAGINGDIRECTORS,MANAGINGDIRECTORS,
ASSOCIATEDIRECTORSFromALANC.GREENBERGCCSubject
Wouldyoupay$72forsomethingyoucouldbuyfor$10?
Ourinternalauditorshavedocumented44instancesinthepastyearwheredepartmentspurchasedatotalof1,356rollsofFAXpaperdirectlyfromvendorsforpricesrangingfrom$10to$72perroll.Thepurchaseswereauthorizedby28differentpeople,includingeightSMDsandonememberoftheexecutivecommittee.
WehaveaPurchasingDepartment,delightedtodeliverFAXpapertoyoufor$7.35perroll.Whynotcallthem?
WeareofferinganincentivetoinduceyoutousePurchasing.Inthefuture,accountspayablewillnotpayanyinvoice(over$200)forequipmentorsupplieswithoutPurchasingDepartment’sapproval.IfPurchasingfindsitcouldhaveobtainedtheitematalowerprice,theSeniorManagingDirectororotherexecutivewhoauthorizedthepurchasewillbechargedpersonallyforthedifference.
YoucanobtainpromptadvancepricequotesfromPurchasingbycallingYvonneAbbott(x8774).
SomeofyoumayhavewonderedwhywehaveadepartmentcalledPurchasing.Thismemoshouldansweryourquestions.ThepurposeofthisdepartmentistopurchasesuppliesanditemsforallofusatBearStearns.Eitherusethatdepartmentorpay.Enoughisenough.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateNovember9,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Herewegoagain.Businessistough.TheDowJonesindexdroppedalmost200pointsamonthago.Firmsareannouncingmajorlayoffs.
Whatisourpostureatthistime?Yourexecutivecommitteefeelsweshouldbehiring,notfiring.Thisisthetimetopickupgreatpeople.Thispositionmayamazesomenewerassociates,butthoseofyouwhohavebeenexposedtoourculturewillnotbesurprisedbythismove.Beingacontrarianhasworkedforusinthepastanditwillworkagain.
Spreadtheword—wearehiring,notfiring.Theflipsideisthatourassociatesshouldberelievedandmaybethepeoplewhoworkherewillevenappreciatewhatagreatplacethisistobuildacareer.
Nookiepointsoutthatwehavebeenremissinnotblowingourownhornalittlelouder.Itamazeshimthatwehavelostpeopletofirmsthatexpandandthencontractlikeaccordions.BeingbashfulwascuteinSnowWhite;Nookieseesnothingwronginexposingourpeopletothehiringandfiringrecordsofourcompetitors.
Oneofthebiggestpayersofup-frontmoneytoregisteredrepresentativeswentoutoftheretailbusinessaftercausingusthreeyearsofgrief.Thiswasnotanisolatedincident.Wehavetohelpourpeoplelookbeyondtheirnoses.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateDecember20,1989ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
YoumayhavereceivedanoticethatthefixedincomeareainNewYorkwasholdinganauctiononDecember19thforthebenefitofAnnCarnes’grandchildren.AnnworksforusontheflooroftheNewYorkStockExchangeandhergrandchildrenlosttheirfatherashorttimeago.Theauctionanddonationsraisedabout$150,000!EverymemberofBearStearnsshouldfeelproudofthisoutpouringforanassociate.
YouhaveprobablyalsoheardthatMoodysjustraisedtheratingofourseniordebtandpreferredstock.CallingthisapositiveinthiscurrentWallStreetatmosphereisanunderstatement.
Whenyoucouplethoseeventswiththefactthatwearehiring,notfiring,maybeyoucanunderstandwhythemoraleatBearStearnsis,andshouldbe,ashighasitis.
Thisisaroughperiod,butyourExecutiveCommitteeisdeterminedtomakeitworktoouradvantage.Wearegoingtocomeoutofthisstrongerandwewillbecompetinginasmalleruniverse.
HaveagreatholidayandIhopeyouarelookingforwardto1990asmuchasIam.Weareontherighttrackandyouareattherightplace—spreadtheword.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateJanuary22,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
OurearningsforthequarterandfirstsixmonthsofourfiscalyearwerereleasedlastThursday.TheywouldhavebeenmuchbetterifwewerenotthebiggestbuyerofFAXmachinesinthewesternworld.MyopinionofthequarterwasthatitwasO.K.Somedepartmentsthathavebeenbigcontributorsinthepasthitsometoughtimes,butmyconfidenceinthemisunshaken.Iamconvincedthatwearegoingtohaveaquarterwheneverydepartmentisplusandthenwewillreallygivetheshareholdersaverypleasantsurprise.Ourpotentialearningpowerisawesome!
ItzhakNanookPumpernickanaylianpointedouttomethatweallreceiveinformationorcorrespondenceinBearStearnsenvelopeswithawindow.Nookieinformedmethatitisnotagainstthelawtore-usethoseenvelopes.Justputthenewsalutationtotheleftofthewindowandbesurethatthewindowisfilledbytheblanksideofthematerialbeingsent.Whenitcomestosavingmoney,thoseEskimo-Iraniancrossbreedsaresomethingspecial.
Wemustcontinuetocutexpenses.Pleasehelpmekeepmyjob!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateFebruary20,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCC
SubjectFrequentFlyerBenefits
Asyouknow,ifyou’veevertriedtoreachanyonearoundhere,manyofthepeopleatBearStearnsdoanenormousamountoftraveling.
IhavebeenadvisedbyItzhakNanookPumpernickanaylianthatallofthistravelisproducingastaggeringamountoffrequentflyerpoints.HesuggestedtomethatperhapstheFirmcouldsaveanimmenseamountofmoneybyusingmileagepointsthatBearStearnspersonnelearnontravelforBearStearns,paidforbyBearStearns.
Therefore,IhaveinstructedtheTravelDepartmenttoreclaimalloftheaccruedmileageearnedonfirm-relatedbusinesstripsandusethemtowardsallfutureBearStearnsfirm-relatedbusinesstrips.
Fromthisdayon,claimyourfrequentflyermileageandturntheawardcertificatesintotheTravelDepartment.Theywilluseyourfreetickets(notupgradecertificates)foryourfuturetravels.Thisappliesnotonlytoallfuturetravel,butalsotoallpasttravel.
TheTravelDepartmentwilluseallawardcertificatesforfreetickets.Employeesarestillresponsibleformonitoringtheirownaccounts,asthiswillbedoneonanhonorbasis(withUncleAceobservingthehonorees).
Thisadditiontoourbottomlineshouldhavebeenpickeduplongago,butevenNookiecandroptheballonoccasion.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateMarch14,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Doyouhaveaproblemwithcolleaguesreturningtelephonecalls?Mydefinitionofaproblemisnotreturningyourcallsoraclient’scallpromptly,ornotatall.
Ifanassociatehascommittedeitherofthoseinsults,youhaveachoice.Youcanstewandcomplaintomembersofyourimmediatefamily,oryoucancallmeatonce.Youwillnotbebotheringme—onthecontrary,youwillmakemyday.Nothingmakesmehappierthanhelping(inaverygentleandkindway)awaywardemployeerelearnbasicgoodmanners.
Imustadmitthattheseeducationalmeetings,usuallyheldatteatimewithcrumpets,dotestmyself-controlbecauseItendtodislikepeoplewhotrytoruinthemoraleatBearStearnsandtrytoindirectlybankruptthisgoldengoose.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateMarch23,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Today’snewspaperdevotedalotofspacetothefactthatalmosteveryWallStreetfirmisdrasticallyreducingitsadvertisingbudget.Wearenotreducingourbudgetonepercentagepoint.Infact,ourTVadvertisingmayevenincreasefromitspresentbase,butinnocasewillitbelowered.
Thisaction,byyourExecutiveCommittee,willnotbeasurprisetotheassociateswhohavebeenatBearStearnsforseveralyears.Wehavetriedtobeconsistentineveryaction.BothHaimchinkelandNookiethinkitisveryimportantthatthetroopsknowwhattoexpect.Beingconsistentmaybedull,butitleadstoapleasantenvironmentandtohappycampers.
Ienjoyworkingforafirmthatishiring—notfiring—andinadditionthefirmisnowcommittedtocontinuingitswitty,elaborateandexpensiveadcampaignwhenotherfirmsareretrenching.Ihopeyoufeelthesame.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateApril10,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectors,
DepartmentHeadsFromAlanC.GreenbergCCSubject
Wehavebuiltourbusinessoncertainprinciplesandtherearetwoaxiomsthatmustberepeatedconstantlytoourassociates.
Wewillnotemploypeoplewhohideorburytrades,evenifthedelayistwenty-fourhours.Duringthepastyear,wehavehadtoterminateseveralpeopleforthisinfraction.OnepersonhadworkedasatraderatBearStearnsforovertenyears.
Wewillnotemploypeoplewhoeverdiscloseourorourclients’tradingactivitywithanybodywhoisnotauthorizedtohavesuchinformation.Disclosingthistounauthorizedpeople,whoworkeitherinsideoroutsideBearStearns,willleadtoimmediatedismissal.
Wehaveaveryliberalpolicyofrewarding,withcashandpromotions,personnelwhohelpusimprovethisfirm.Ifyouwanttobecomealotricher,justgiveusinformationthatwillaidusindiscoveringemployeeswhoviolateeitherofthetworulesofbehaviorthatIhavejustmentioned.Callyoursupervisorormewithanyofyoursuspicions.Youwillneverbecriticizedifyourinformationprovestobeinaccurate.Thefableabouttheboywhocried“wolf”doesnotfitwiththeBearStearnsphilosophy.Cry“wolf”ateveryopportunity.Ifyourdoubtsprovetobefalse,youwillstillbethanked.
Nookieaskedmetocommentaboutaparticularlyviciousrumor.Itisnottruethatwearefiringanyofourjetpilotsorcompany-employedchauffeurs.AnypilotorchauffeurwhoiscurrentlyemployedbyBearStearnshasajobthatissaferthanmine.TheserumorsaregettingsoridiculousthatitwouldnotsurprisemeifIheardthatwearecuttingourTVadvertisingbudget.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateMay9,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Whensummerarrivesitseemsthatabsenteeismincreases.Weneedeveryoneonthejobeverydayifwearegoingtokeepourmomentumgoing.
Nookieheardofmyconcernandhefeltthematterofsuchimportancethatheconsultedwithhisuncle,HaimchinkelMalintzAnaynikal.Theircollectivethoughtsarelistedbelow.PleasenotethatIdonotagreewithalloftheirsuggestions:
1.Sickness
NoEXCUSE...Wewillnolongeracceptyourdoctor’sstatementornoteasproof.Itisclearthatifyouarewellenoughtogettothedoctor’soffice,youarewellenoughtocometowork.
2.LeaveofAbsence(Foranoperation)Wearenolongerallowingthispractice.Wewishtodiscourageourassociatesfromexposinganypartoftheirbodytoaknife.Knivescutandcutscausebloodandthat’sbad.
Wehiredyouasyouareandtohaveanythingremovedwouldclearlymakeyoulessthanwebargainedfor.Therefore,anyonehavinganoperationriskstermination.
3.Death(Yourown)Thiswillcontinuetobeavalidexcuse,butwewillnowrequireatwo-weeknoticesincewewillhavetoreplaceyou.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateJune8,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
IhavetakenthelibertyofreprintingamemothatwasissuedonJuly17,1989.Itseemslikesomeofourassociatesarerevertingbacktobadhabitsthatcouldbecorrectediftheyreadthereprint.
“Thein-housetelephoneoperatorsarebeingswampedbyourownassociatesdialingtheBearStearnsoperatorandaskingtobeconnectedtoanotherBearStearnsemployee.AllofushavebeengivenBearStearnsdirectoriesandweshoulddialthenumbersourselves.Thiswillfreeupouroperatorstodoconstructivethingslikeadequatelyservicingclientswhoaretryingtoreachourswitchboard.
Therearetworeasonsthatthedirectoriesarenotbeingused:
1.Laziness
2.Notbeingabletoread
Nookiehassuggestedwaystohandlebothpossibilities.Thechiefoperatorwillkeeparecordofemployeeswhoneedconstanthelpfromtheoperators.Ifthosepeopleareliterate,theywillmeetwithme.
Forthoseassociateswhocannotread,wewillhavepeopleoneveryfloorwiththedesignationofH.I.*Ifsomeoneneedshelpinreadingthedirectory,alltheyhavetodoisyell“HI”andhelpwillarrive.Thiswillnotonlyimproveourservice,butcouldalsoincreasethesociallifeofthedumbbells.
Thisformatshouldkilleverycatinthealley.”
*CodenameforHelperofIlliterates.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateJuly10,1990ToSeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFromAlanC.GreenbergCCSubject
Anotheryearhasended.Ourresultswillbepublicknowledgeinafewweeksandwecanallbeproudoflastyearformanyreasons—includingthefactthatwearestillhere,strongerthanever.
Icanguaranteeverylittleaboutthefuture,butthereisonethingyoucanbeton.Yourexecutivecommitteeisgoingtospendalotofthenewyearstressingfundamentals.Idonotthinkoursuccesshasbeenduetoluck(althoughallofuswelcomeandappreciategoodluck).
Footballteamsthatareingreatconditionandcanblockandtackle,win.Wearegoingtowinbecauseweconstantlykeepinmindcertainaxiomssuchas:
1).Itisourjobtoinspirereceptionistsandsecretariestosmileandsparklewhenspeakingtoorseeingclients.ThetoppeopleatBearStearnssetanexamplebyreturningallcallspromptly.
2).Avoidtheherdmentality.3).Controlexpenses—evenmoresoingoodtimes.4).EverydepartmentshouldbestaffedwiththebestandthebrightestbecauseIcannottellyouwhichareaofourbusinesswillbe“hot”sixmonthsfromnow.
5).Reduceexpenses.6).Wearegoingtosticktothethingswethinkweknowsomethingabout.Iamtoooldtostartsellingcars,costumejewelryorlifeinsurance.
7).Conceitandcomplacencyaredangerous,particularlyinourlineofwork.IfIeverfeelthatthepeopleatBearStearnsstartthinkingtheirbodyodorisperfumeandIcannotconvincethemotherwise—Iwillsellmystock.
8).Ilikepeoplewhoconducttheirbusiness“neatandclean.”Ifyoudonotunderstandthat,callme.
9).Cutexpenses.10).Wemustalwaysbeonguardindealingwithnewrelationships,andour
associatesmustalwaysbeawarethatwearewatchingtheshopandthematalltimes.Thebestprotectionagainstin-housefraudisformanagementtohaveagreatrapportwithassociatesbigandsmall.Theywillseeaberrationalbehaviorinaco-workerfouryearsbeforeinternalauditspotsthedeception.
TheseguidelinesarenotexactlytheTenCommandments,buttheydidcomeviaHaimchinkelMalintzAnaynikal(norelationtoMoses)andwearegoingtolivebythem.Idonotbelieveinfixingsomethingthatisnotbroken.
MEMO
FROMTHEDESKOFALANC.GREENBERG
Date:September26,1990To:SR.MANAGINGDIRECTORS,MANAGINGDIRECTORSAND
ASSOCIATEDIRECTORSFrom:ALANC.GREENBERG
ThereisnoquestioninmymindthatpeoplewithnoaffiliationwithBearStearnshavebeencallingemployeesofBearStearnsandmisrepresentingthemselvesasco-workers.Theseimpersonatorshaverequestedconfidentialinformationandhavesaid“donotcallmeback,becauseIamverybusy,butIwillcallyou.”Theydocallthelow-levelassociatesbackandidentifythemselvesasanimportantBearStearnsSr.ManagingDirectorandtrytogetinformationthatnoonebutafewBearStearnspeopleshouldpossess.
Weareofcoursegoingafterthefirmsthesecrumbsworkforwitheverylegaltoolwecanmuster,butwemustdomore.Allofusmustimpressoneverybodyweworkwithtobewareof“donotcallme,Iwillcallyou”inquiries.Iftheygetoneofthosecalls,andreportitatonce,theywillsimultaneouslybeshoweredwithmoney(cash,loot,lucre,greenstuff).Letpeopleupanddownthelineseethismemo.
Weareinourownwarwithpeoplewhodonotminddestroyingourcustomerconfidentialitytoachievetheirownpersonalgoals.HaimchinkelMalintzAnaynikalpointedouttomethathehasmetsomeRussianrouletteplayersthathavewonsixormoreboutsinarow,buthehasnevermetaone-timeloseratthatsport.Idonotlikesportswhereifyouare11for11andthenloseone,youareoutofbusiness.ThatiswhereIfeelwearenow—wemustwinthisone.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:October3,1990TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.GreenbergRE:1990AnnualReport
Our1990AnnualReportisnowout,andwhilethefinancialresultshavebeenpublicforsometime,theystillmakegoodreading.Whatreallymakesthereportnoteworthy,however,iswhatwedonotmention:nolayoffs,nodiscontinuedbusinesses,nowrite-offsofbridgeloansordoubleleveragingofshort-termborrowings.Insteadweareabletostressthesafetyandstrengthofourbalancesheetandofourfirm.Inthiseraofuncertaintythisputsusinauniquepositionnotonlywithinthebrokerageindustry,butwithintheentirefinancialcommunity.
ItmayalsointerestyouthatsinceAugust2,1990wehavepurchased5,400,000sharesofBearStearnsandretiredthem.YourExecutiveCommitteebelievesinBearStearns.
Iencourageyoutogetacopyofthereport,readit,andseethatpeopleinyourareaseeit.Ifurtherencourageyoutoshareitwithyourcustomersandmakethemawarethatnow,morethanever,theycannotaffordnottodobusinesswithBearStearns.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:October17,1990TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Youarecorrect.Thisisonetoughperiod,andinmy41½yearsinWallStreetIhaveseenafew.Infact,thingsaresobad,inalmosteveryarea,thatHaimchinkelMalintzAnaynikalmadeanunexpectedvisit(hestressedthatthiswasnoreflectionontheadvicewehavebeengettingfromhisnephew,ItzhakNanookPumpernickanaylian).UncleChinkeljustfeltthathemightpointoutsomefactorsthatonlyexperiencecanteachyou.
1.Thebearmarketwillendanditcanendquickly.2.Abellwillnotringtoprepareyouforthegoodtimes.Rememberhowgreattheworldlookedthreemonthsago?Themarketcanreverseitspresentcoursejustasdramatically.
3.Thismarketgivesallofusachancetodemonstratewhatwearemadeof.Somepeoplegoallthroughlifeandnevergetachancetodemonstratetheirabilitytolead.Youarefortunate!Youcanhelpthepeopleyouworkwithtogetthroughthisbybeingaleader.Nowisthetimeforrealleaderstostepup.
4.Ifyouaregoingtostandtall,keepafewthingsinperspective.ThisisnothingnexttoAuschwitz,BuchenwaldorVietnam.
5.YouareworkingforprobablythemostliquidfirminWallStreetandourfirm,onarelativebasis,looksstrongereverydayandwewillkeepitthatway.
6.HaimchinkelMalintzAnaynikalpointedoutthatsomepeopleforethnicreasonsmaygetthroughthisperiodeasierthanothers.Forexample,Ihaveneverfeltbetterorsleptsounder,butIdohaveanadvantageoversomeofmypeersatotherfirms—Iamthebeneficiaryof5,000yearsofpersecution.
Thismarketwillnotgetmedown.Itisjustaminorchallenge.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:December6,1990TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Itisofficial!TheStrategicPlanningCommitteechairedbyBobbySteinbergandtheForwardPlanningCommitteechairedbyBarryCohenhaveinvestigatedtheoutlookfortheRiskArbitragebusinessandhavecometoaconclusion.Wearegoingtoexpandouractivityinriskarbitrage.ThereportbythesetwoknowledgeableandunbiasedgentlemenconfirmedwhatyourExecutiveCommitteehadfeltallthetime.
Thisinquiryintotheeconomicfeasibilityofriskarbitragewaspromptedbythefactthatseveralmajorinvestmentbankingfirmsseemtobelessthanpositiveaboutthefutureofthisactivity.YourExecutiveCommitteewouldhavebeennegligentifitdidnotthoroughlyanddeeplystudythisancient,arcaneandmysteriousart.
ThecompletereportsubmittedtoyourExecutiveCommitteeisbelow:
“AuContraire”
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:January10,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
HaimchinkelMalintzAnaynikaldroppedbytheotherdayandsuggestedtomethatitwasagoodtimetoreviewsomefundamentals.Pursuanttohiswish,youwillbereceivingsomesubtlememosfrommeinthefuture,butIcanassureyouthatmypresentationswillbemoredelicatethaninthepastbecausethedirectapproachdidnotseemtowork.
Manyyearsago,yourExecutiveCommitteedecidedthatallpurchasesofservicesweretobecentralizedtohelpusmaximizeourbuyingpower.Asanexample:anythingneededintheofficehadtogothroughJimLang’sarea.AnyneedforalawyerhadtobepickedbyDaveGlaserorAlanSchwartz.AnythingneededfortherepairandmaintenanceofthetoiletshadtobeclearedwithAlanGreenberg.
Thereisnosuchthingasan“approved”list.Thefactthatsomeplumberdidamarvelousjobforusinthepastdoesnotmeanthatanassociatecantakeituponhimselftoengagethatpersonfornewwork.Ifyouneedaplumber,youmustcallmeandIwilldecidewhogetsthenextassignment.
Irepeat,thereisno“approved”listthatpeopleatBearStearnscaninitiateacallto.Ifyouneedtheservicesofanaccountant,lawyer,plumber,printer,etc.,youmustspeaktothepersonthatyourExecutiveCommitteehaspicked.Youcannotmakethechoice.
Ifthismemoisnotclear,pleasecallmedirectlyandIwilltrytoclearupyourconfusion.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:January28,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Youhavereceivedseveralnoticesabouttheimportantmeetingthatisbeingheldtomorrowafternoonintheauditoriumat4:15p.m.
IthinkanybodywithadropofJewishbloodshouldshowup.Yourheritagewillbetakenintoaccountifyoumakeapledge.Forexample,ifyouareonlyhalfJewish,youonlyhavetopayhalfofthepledge.IfyouareaquarterJewish,youonlyhavetopayaquarterofthepledge.
Israelisinafightforitseconomiclife,alltheywantfromusismoney.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:January31,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
IfyouwereintheBearStearnsauditoriumonTuesdayafternoon,youparticipatedinathrillingandexhilaratingexperience.
Inadditiontogettingpeopletopaytheiroldpledges,U.J.A.Federation’sOperationExodusreceived$650,000innewmoneyfromtheBearStearnspeople.
Thegiftsrangedfrom$25.00uptothethousands.EverygiftwasappreciatedandIhaveneverbeenprouderofmyassociatesthanIwasyesterday.Thankyouforsettinganexamplethatotherfirmscanjustdreamaboutemulating.BearStearnshasareputationofgivingtoallcausesthatiswelldeserved.
Someofthegiftshavecomefrompeopleofverydifferentreligiousandethnicbackgrounds.Iwishtogivethosepeopleaspecialthanks.Itwouldbegreatif100%ofourfellowworkersofacertainreligiouspersuasionkickedin.Theneedisurgentandthecauseisunique.
Letussetarecordthatcanonlybetied—100%participationbythosewithatouchormoreofJewishblood,frommillicarons*topurebreds.
*Nookie’sdefinitionforthosewhoare.0001%tainted:theycanpledge$1,000,000andaccordingtotherulestheyonlyhavetopay$1.00.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:February8,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Whosaidwearenotflexible?IthasbeenbroughttotheattentionofyourExecutiveCommitteethatsomeofournewhireeshavetroubleadjustingtooneaspectofourculture.Iamreferringtoourrelentlessquesttocutandwatchexpenses,exemplifiedbyourrefusaltobuypaperclipsandrubberbands.
Weshouldhaveanticipatedthiscultureshockbecausewhenapersonjoinsusfromafirmthathasbeenlosingbillions,theyshouldfeelthatwedothingsalittledifferentlythanthepack;butwedonotwantthemtogetthebends.
Fromthisdateforward,theExecutiveCommitteeismakingthefollowingconcession:allnewassociateswillreceiveagiftwhentheyjoinBearStearns.Thisgiftwillbekindofacombinationofacarepackageandawelcomewagonextravaganza.Thepersonneldepartmenthasbeentoldtogivethesenewfolksapaperbagwithaboxofpaperclipsandtwentyrubberbands.
Pleasedonotthinkforaminutethatthisrepresentsachangeinourbasicphilosophy.Infact,sincebusinessisboomingwewillonceagainemphasizecostcontrol.Rememberthatgreatpokerplayersleavenothingonthetablewhentheyholdgoodhands.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:February27,1991TO:SeniorManagingDirectors,andOtherInterestedPartiesFROM:AlanC.Greenberg
AnartistinHawaiibythenameofRonKentreadaboutourcharitableactivitiesanddonatedabeautifulbowltoBearStearns.Heaskedthatwehavealotteryforthisbowl,withtheproceedsgoingdirectlytoOperationExodus.
Thebowlisondisplayonthesecondfloorof245ParkAvenueontheaisletotheleftofwhereIsit,andinfrontofthebellinthecenterofthetradingfloor.Thiscircularbowlishandmadeofwoodandmeasuresapproximately20˝by9˝.BecauseofthespecialHawaiianwooditismadefrom,thecolorofthebowlcontainsmanydifferentshadesofbrownwithasmoothfinishedtexture.
Ifyouwouldliketobuyalotteryticket,youcanspeaktoMaureenorLisaonextension4608.Theticketswillcost$25apiece.
Thebowlisworth$5,000andwearegoingtolimitthenumberofticketssoldto10,000(mypervertedsenseofhumorcouldnotpassupthatopportunity).Wewillsellonly100tickets.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:March28,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
OurthirdquarterendedonMarch28th.Everybodywhoworkshereandisnotcomatoseknowswearerolling!
TheresolutionoftheJardinedisputeisaplusforalotofreasons.ThesettlementwasfairandalotofpeoplecannowgobacktoworkingfulltimeattheirjobsatBearStearns.
OurdisputewithJardineisoverwith.IwillneversayabadwordaboutJardineoritsofficers.IfIhearofaBearStearnsassociatespeakingillofJardine,Iwillbedisappointed.Infact,mydisappointmentwillonlybetemperedbyapersonalmeetingwiththeloudmouth.WehadadifferencewithJardineanditishistory.Thereisnoupsideinknockinganyone.
Wheneverthingsgotoowell,Ibecomeverysuspicious.Thisisoneofthoseperiods.Keepyourguardup!Nowisthetimetobecareful.Nowisthetimethedopesgetknockedoff.
Remembertherulesandrememberourculture.Whenbusinessisgood,webecomecarefulwithourcapitalandtrytocutexpenses.
1991–1995
Weenteredthedecadeofthe’90swithacertaindegreeofapprehension.Althoughwehadsuccessfullyemergedfromthreeverydifficultyearsinthestrongestfinancialpositioninourhistory,noonecouldbesurewhatthenewdecadewouldbring.Webelievedwewerewellpositionedtoflourishifthe-marketscontinuedtheirupwardcourse,whichtheydid.BearStearns’momentumsurgedbeyondanyofourexpectations.Wereportedtwoconsecutiverecordyearsinfiscal1992and1993.Todayourreturnonequityisthehighestintheindustry.
Thesememosreflectanimportantperiodinthehistoryofthefirm.Overthepastthreeyears,BearStearnshasgrowndramatically.Ouremployeecounthassurpassed7,500andourcapitalbasestandsat$7.1billion.Attheendoffiscal1991thefirmemployed5,600peopleandthecapitalbasewas$1.8billion.
TheseniormanagementofBearStearnshasbeenverycarefultocontrolthegrowththroughacontinuedfocusoncertainfundamentalprinciples.Weareallveryproudthatthoseprincipleshaveenabledustocreateoneofthemostprofitableandentrepreneurialfirmsinthesecuritiesindustry.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:April17,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
TheearningsforthequarterendingMarch31,1991arenowhistory,buttheydonotcomeclosetodescribingthepastthreemonths.Ihavebeenhere42yearsandIcannotrecallanyperiodthatcomesclosetotheexcitementandpleasurethatthose90dayshavegivenme.Ihopethatyouhaveexperiencedthesamefeelingofexhilaration.
Itisuptoeveryoneofustokeepourmomentumgoing,butwemustalsokeepallofourcollectivefeetfirmlyontheground.
DuringtheJardinetrial,amemoofminedatedJuly1987wasreadintotherecord.Thesummerof1987wasanothertimeofeuphoriaforBearStearns(butnothinglikethis).Thegistofthememowasthatwhenthingsaretoogoodsomethingusuallyhitsyourightinthehead.
ThedifferencebetweenusandtherestoftheworldisthatwehadthebenefitofexposuretoHaimchinkelMalintzAnaynikalin1987andnowItzhakNanookPumpernickanaylian.Thesetwoluminarieshavedonetheirbesttoremindusoftheimportanceofneverconfusingbodyodorwithperfume.
WemuststicktotheaxiomsthathaveguidedBearStearnsthroughsomeplentytoughyears.Ifyouknowofsomebetterrules,pleaseletmeknow.Ifnot,yourExecutiveCommitteeisgoingtoenforcetheteachingswithavengeance.Welikethingsthatwork—THEYWORK.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:June21,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Ourfiscalyeariscomingtoacloseandtosaytheleastitwasexciting.Westartedoffslow,butthelastsixmonthsshowedourpotentialearningpower.
YourexecutivecommitteehasnosurprisesinstorefortheNewYear.TheprosperityinWallSt.hascausedsomeofourcompetitorstostartreachingforbusiness,andonceagainwewilldeclinetoparticipate.Thoseofyouwhohavebeenhereforawhileknowthatwewilltaketremendousrisksifthefeejustifiestheexposure.
Wehaveareputationforwatchingexpensesandthatwillnotchange.NookiePookiepointedoutwhathappenedtoEgypt.*ThatwillnothappenatBearStearns.
OnJuly1,ourNewYearstarts.Thescoreiszerotozero.Iwouldlovetoseeusscorchthefrontnine.Historicallythefirstsixmonthsofourfiscalyeararedifficult.Letusmakethisyeardifferent.IamanoldmanandIdonotlikepressure.
*7,000yearsagotheEgyptianswerebuildingpyramidsandtheirwomenwereridinginchariots,andgettingmanicuresandpedicures(weknowthatfromthepaintingsinthetombs).Atthatsametime,therestoftheworldwaslivingincavesandchasingtheirnextmeal.TheEgyptiancivilizationcontinuedtoadvancefor5,000yearsandthentheystartedgettingcarelesswithexpenses.Theiroverheadgotoutofcontrolandthatwasthat.Theyhavebeentryingtorecoverfor2,000years.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:August13,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFrom:AlanC.Greenberg
Wehavebeenlucky!
During the roaring carefree period ofWall Street’s latest excesses not one ofBearStearns’seniormanagingdirectorshasevenreceivedasubpoenamuchlessbeenchargedoraccusedofinfractionsrelatingtoinsidertrading,stockparking,manipulationorotherviolationsofthistype.Yes,wehavestressedtherulesofconduct andbehavior as codifiedbyHaimchinkelMalintzAnaynikal.Yes,wehavehadthebenefitsofNookie’son-spotinspectionssinceUncleChaimretired,butwehavealsobeenlucky.
Someof our associates below the seniormanagingdirector level have strayedandtheyhavepaiddearly,butthusfartopmanagementhasbeensqueakyclean.
Wemustmakeaconcertedefforttokeepitthatway.Idonotwanttocountonbeinglucky.Allofusmusttalktoourco-workersaboutourrespectfortherules.Allofusmustemphasizetoourco-workershowtheyarebeingwatchedbyusatalltimes(fortheirowngood)andhowsevereourpenaltiesareforinfractions.Ithink it was Mark Twain who said, “fish stink from the head.” The seniormanaging directorsmust set examples that leave no doubt about howwe feelaboutmoralityandobservanceofrules—bigorsmall.
I do not know of a firm of our size that comes close to our record of seniormanagement compliance. We can all be proud, but we must not becomecomplacent.Wemustnotcountonluck.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:August14,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Two important milestones were reached last week. McDonald’s sold their70thbillionhamburgerandBearStearnsboughttheir10,000thFAXmachine.
Idohavesomesadnews to report.TheFAXmachinesalespersonwhohasserviced theBearStearns account has retired.He is burnt out—he is 33yearsold. He has purchased Donald Trump’s yacht, and the overworked soul justwantstocruiseandtakeiteasyforawhile.
Nookiereadthisandthinksthereisamoralhiddensomewherebetweenthelines.Canyoufindit?
Whenwe cut expenseswe have a direct, equal and positive impact on ourbottomline.Ifweforgetthisfactwewillbeamemberofthe“LosersClub”andstupid.Thatisoneclubthatwearenotjoining.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:August26,1991TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Wearehavingaproblemgettingapointacross.Nobodybelowthe levelofSeniorManagingDirectorisallowedtosendanylettersorsignedmaterialoutofBear Stearns unless the sender has shown the epistle to a Senior ManagingDirectorandreceivedhisapproval.
Fromthisdateforwardanypersonwhoviolatesthissimplerulewillreceiveaveryquicksimplefine.Enoughisenough—wehavetriedbeingMr.NiceGuy—itdidnotwork.
Allofus receivevariousprintouts andotherprintedmatter everyday fromBearStearns.Ifyoudonotneedtheinformationoriftheinformationshouldnotbeforyou,callPatRipley212-272-3271.Patwillthendotwothings.Shewillstop the useless flow and also target you for a reward. If you do not cut offinformationyoushouldnotbeexposedto,youwillbefined.
Readthismemocarefully,andbesurethepeopleyouworkwithunderstandourpolicy.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:NOVEMBER11,1991TO:SENIORMANAGINGDIRECTORS,MANAGINGDIRECTORS,
ASSOCIATEDIRECTORSFROM:ALANC.GREENBERG
Ourbusinessisgreat!AlmosteverydepartmentiscontributingandmaybethepredictionImadeattheannualmeetingiswithinsight.
TherearethreethingsIknowforsurewhenweareinoneofthesecycles:
1)Thisperiodofeuphoriawillnotlastforever(neitherIoranyotherhumancanaccuratelypredicttheend).
2)Humanstendtogetsloppywhenmakingmoneyiseasy.
3)BearStearnswillnotgetcaughtupinthehystericaloptimismandthepeopleatBearStearnswillnotgetcarelessorconceited.
Itisthejobofyourexecutivecommitteetokeepallofourfeetonthefloor.ItisthejobofyourExecutiveCommitteetoseethatwemaximizetheopportunitiesthatwearebeinghanded.
Remember,winningpokerplayerssqueezeeverynickeloutofgoodhands,andtheydonottipcocktailwaitresses$100—foolsdo!
Rememberthesimpleaxiomsthathavehelpedusingoodtimesandbad.Havingagreatyearisnotgoingtochangeourculture!
–Ifwecontrolexpenses.–Ifwediligentlyevaluaterisks.–Ifwehirecarefully.–Ifwerunourbusinessaccordingtothehighestlevelofmorality.–Ifwetreatourassociatesthewaywewouldliketobetreated.
–Ifwereturnalltelephonecallsquicklyandseethatthepeoplearoundustreattheclientswithcare.–Ifwejustusegoodcommonsensewecanturnagreatyearintoafabulousone.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:November14,1991TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Theunsignedletterstapledtothismemowasreceivedbymeafewdaysago.
Thepageabout“travelrestrictions”seemsalittletough,butIambynatureasoftie.Iwillbemakingsomerandomcallsinthenextfewdaystotrytogetaconsensusaboutwhetherweshouldincorporateanyofthesesuggestionsintoourculture.
November7,1991
Mr.AlanC.GreenbergChairmanandChiefExecutiveOfficerBear,Stearns&Co.Inc.245ParkAvenueNewYork,N.Y.10167
DearMr.Greenberg:
WhilecallingonyourWhippanyofficelastmonth,Icameacrossacopyofyourbooklet,“MemosfromtheChairmanVolumeII,”whichisgreat!
Havingbeenforcedtoacceptearlyretirementfromanailinginvestmentbankingfirmlastyear,yourprescriptionsforcost-consciousnessaremostappropriateregardlessoftheeconomicclimate.MyformerfirmwasguiltyofmostoftheabusesNookieistryingtoeliminate.
IthoughtthatyoumaywanttopassalongtheenclosedmemotoNookieasitmaygivehimfoodforthoughtinhisongoingquesttoreduceexpensesandcontributetoBearStearns’viability.
Keepupthegoodwork!
Sincerely,
AnadmirerofyourmanagementstylewhodidnothavethegoodfortunetoworkatB.S.andisnowselling“smallplasticroses.”
Encl.
TO:ALLEMPLOYEES
RE:TRAVELRESTRICTIONS
Due to budget constraints, the following corporate policies are announcedregarding employees traveling on official business. These policies areeffectiveimmediately.
TRANSPORTATION
Hitchhiking in lieu of commercial transport is strictly encouraged.Luminescent safety vests will be issued to all employees prior to theirdeparture on company business trips. Bus transportation will be usedwhenever possible.Airline ticketswill be authorized for purchase only inextremecircumstances,andthelowestfareswillbeused.If,forexample,ameetingisscheduledinSeattle,butalowerfarecanbeobtainedbytravelingtoDetroit,thentraveltoDetroitwillbesubstitutedfortraveltoSeattle.
LODGING
All employees are encouraged to stay with relatives or friends while oncompany business. If weather permits, public areas such as parks andparking lots should be used for temporary lodging sites. Bridges mayprovideshelterinperiodsofinclementweather.
MEALS
Expendituresformealswillbelimitedtotheabsoluteminimum.Itshouldbenoted that certain grocery chains, such as General Nutrition Centers andPiggly Wiggly stores, often provide free samples of promotional items.Entire meals can often be obtained in this manner. Travelers should also
become familiar with indigenous roots, berries and other protein sourcesavailableattheirdestination.Ifrestaurantsmustbeutilized,travelersshouldseek establishments offering “all you can eat” salad bars. This will beespecially cost-effective to employees traveling together, as a single platecanbeusedtofeedtheentiregroup.Employeesarealsoencouragedtobringtheir own foodwhile on company business. Cans of tuna fish, Spam andBeefaroni can be conveniently consumed at your leisure, without thenecessarybotherofheatingorothercostlypreparation.
ENTERTAINMENT
Entertainmentwhileontravelisstrictlydiscouraged.Ifsuchextravagancesare required on customer contacts, the customer should be encouraged to“pick up the tab.” Such action will save the company money, and alsoconvince the customer that we are concerned about spending money onprovidingagoodproduct,notonuselessfrivolities.Thehospitalityprovidedto our customers who visit our facility shall also be tasteful, yet cost-effective.Inlieuofextravagantdinners,apicnicbenchwillbeplacedintheparkinglotsnearthedumpsterandagardenhosewillbemadeavailablesothatliquidrefreshmentscanbeprovidedforourguests.
MISCELLANEOUS
Allemployeesareencouragedtoemployinnovativetechniquesinourteameffort to save corporate dollars. One enterprising individual has alreadysuggestedthatmoneycouldberaisedduringairport layoverperiodswhichcouldbeusedtodefraytravelcosts.Insupportofthisidea,RedCapswillbeissued to all employees prior to departure so that they may earn tips byhelpingothertravelerswiththeirluggageduringsuchperiods.Smallplasticroseswillalsobemadeavailabletoemployeessothatsalesmaybemadeastimepermits.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:November21,1991TO:AllTradersFROM:AlanC.GreenbergCC:
In thepast I havewrittenyouabouthiding tradesormismarkingpositions.Unfortunately,it’snecessarytorepeatthememo.
We were recently forced to fire a trader for mismarking positions in histrading account to conceal a loss. Let there be no misunderstanding: this isstealingandwillnotbetolerated.Ifyouhaveaproblemposition,discussitwiththeheadofyourdesk.Absolutioncanbegrantedforlosingmoneybutneverforlyingaboutit.
Allmanagersareresponsibleformakingsurethatthisisunderstoodbyalloftheirtradersandfordeliveringthemessagetoallfutureemployees.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:December5,1991TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Nookie remindedmeof something that shouldbeautomatic,butwhenwegetbusypeopletendtogetsloppy.Sinceahugepercentofourbusinessisdoneoverthetelephone,telephoneetiquetteisveryimportant.
When a phone rings, it should be answered promptly—if you keep clientswaiting,theywillandprobablyshouldcallourcompetition.Ifyouansweracallanditisnotforyou,besurethatyourassociateacknowledgesyourbringingthecalltotheirattentionbyraisingtheirhand—eyecontactmeansnothing.
Ifyouseeacallonholdthatseemstobeblinkingforaperiodoftime,jumponandseeifyoucanhelpthepersonorremindyourco-workerthatheorshehasacallwaiting.
There is nothing revolutionary about these suggestions; suggestions made byHaimchinkelMalintzAnaynikal and his nephewNookie always seem simple,but so isgravity.LookhowmuchpublicityHymieNewtonmilkedoutof thatapplething.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:January15,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
BearStearns just announced themostprofitablequarter in itshistory. Industryconditions during the last three months were excellent, but my guess is weoutperformedourpeers.
HaimchinkelMalintzAnaynikalandNookieovertheyearshaveencourageduswhenthingslookedbleakand,conversely,theyhavewarneduswhenthingstendtogetgiddy.Weareinaperiodnowthatwillcausethestupidtogetcarelessandoverconfident,andtheresultsaretotallypredictable—financialcatastrophe.
TheExecutiveCommitteeofBearStearns iscommitted to running the firm inthe samedull, conservative, boringmanner that seems towork. It is our hopethatthepeoplewhoworkwithuskeeptheirfeetonthegroundandtheirheadslevel.
Almosteveryindustryinthiscountryishavingfinancialproblems.Itistruewepaid our dues by surviving and even prospering during some tough years forWallStreet,butdonotconfuseluckwithbrains.Wemust,asafirmandIhopeindividually, make the most of this euphoric period but give very little backwhenthecurtainfalls.Icanpromiseyouonething—thispicnicwillnotlast.
BECAREFUL,BESMART,BEASURVIVOR!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:January21,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
IjustcheckedwithHaimchinkelMalintzAnaynikalonaphilosophicalissuethathasbeenbotheringme.Thequestionistwo-pronged:“Shouldreallyrichpeopleanswer theirowntelephonesand, if theyareoccupiedwhen thecallcomes in,does an immediate return of the call by the millionaire show weakness or adearthofcommitteemeetingsoralackofattentiontostrategicplanning?”
HaimchinkelMalintzAnaynikalhadNookiedosome research.The resultsareconclusiveandirrefutable.ThereisnothingintheBible,KoranorTalmudthatprohibitsorencouragestheslowansweringofadistantyodelorthemelodioussquawkofaram’shorn(therewerenotelephonesatthetimethosebooksweregivenorwritten).Inaddition,therearenogovernmentallawsthatNookiecouldfind (except for some new and old countries in Eastern Europe) that prohibitansweringyourowntelephoneorquicklyreturningacall.Justthoughtthatthesequestionsmayhavecrossedyourmindastheydidmine.
Thereisonemoreitemthatbearsthinkingabout.Thisisthetimetoreallykeepaneyeonexpenses.Whenyouareinvolvedinamonthlikethecurrentone,itiseasy togetsloppy.That iswhatmakesusdifferent—wewatchexpenseswhenbusinessisgreat!Ifyouturnoutthelightswhenyouleaveyouroffice,youwillsave a few pennies, but the example can save the firm bigmoney. Fish stinkfromthehead!Thetoppeoplesetthetonefortherankandfile.Setanexamplethatwillmakemegiggleandgurgle.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:March17,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
It ismy sad duty to report the death ofChristianK.Nelson at the age of 98.ChristianNelson,seventy-oneyearsago,dippedaslaboficecreaminchocolateandcalleditaneskimopie.
ThislosswastakenparticularlyhardbyHaimchinkelMalintzAnaynikalandhisnephew,Nookie.Becauseasyouknow,theirmostreveredholidayisEskimoPieDay.*Itis,tothem,thecombinationofChristmasandYomKippur.
Mr.ChristianNelsonwasnotonlyaninventor;hewasalsomanyyearsaheadofhistimeintheareaofhumanrelations.Despitehisname,heallowedpeopleofallfaithstobuyandeathisproduct.HewasatruevisionaryandtheholidaythathehelpedcreatewillbeobservedforeverbypeopleofIrakimoheritage.**
*SeememodatedOctober4,1988.
**TheissueofanIranianandEskimounion.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:March30,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Afewdaysago,theNewYorkassociatesofBearStearnsat245ParkweregiventhechancetohavetheireyesexaminedbytheGlaucomaFoundation.
Herearetheresults.563peopleparticipated.Twenty-sixhadpotentialproblems,two had serious problems and seven had glaucoma requiring immediateattention. These statistics are scary.We are going to see that every person ineveryofficeofBearStearnshasachancetogetthisexamination.Glaucomaisaterrifyingdisease.Pleaseseethatthepeopleinyourareatakeadvantageofthisopportunity.
Good health is important to all of us and to the bottom line of Bear Stearns.Illnessisexpensive!
Itisworthrepeatingthatourpolicyonsmokingisclear.NosmokinganywhereatBearStearnsexceptinyourownofficewiththedoorclosed.Therewillbenoexceptions—unlessyouhaveworkedatBearStearnsmorethan43years.
The front page of the Business section of Sunday’s NewYork Times had anarticleaboutbrokerage stocks.Thearticle states, “thehistoryofWallStreet isthat surprisingly little filters through to the shareholderswhen times aregood.Thebossesraisetheirpay,perksseemtomultiply,andlotsofpeoplearehired.Itwassupposedtobedifferentthistime,butifthenewSalomonisactingthisway,whataboutbrokersnotinthespotlight?”
Obviously,thewriterisnotfamiliarwithBearStearns!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:April23,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Bear Stearns is now being billed directly for electricity. Leaving lights ormachinesonwhennotnecessaryisburningmoney.
It will probably surprise you that I think burning money is stupid, and inaddition,itisadirecthittoourbottomline.Someexpensesaretoughtocutbutsaving on electricity is easy, although it does require a little muscularcoordination.Somenon-athletesmayhave troublemakingcontactwitha lightswitchwhilewalking,butitcanbedonebyalmostanyoneifyouconcentrate.Infact,afteralittlepracticeyouwillbeabletothrowaswitchwhilewalkingfast.Makeagameoutoftheritual—seehowmanyconsecutivetimesyoucanfliptheswitchwithoutmissing.
Cuttingexpensesisthesurestwaytoincreaseourearnings.Ifweallcooperate,maybethisconcernforourprofitswillgetourP/Emultipletoseven.
Spreadthewordtothepeopleinyourareaandthenenforcethediscipline.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:June23,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Our yearwill be over in a few days. Itwas a record breaker and all of usshouldfeelproud.
BearStearnshasneverbeenstrongerorpositionedasbeautifullyasweareatthismoment.The teamwork that all ofyoudemonstratedover thepast twelvemonthswassensationalandIthinkthatfactorwasabigreasonthatwehadsuchmammothresults.
IhavebeenassociatedwithBearStearns formanyyearsand Ican tellyouthatIhaveneverbeenasoptimisticaboutourfutureasIamatthistime.Takealookat thepeoplewhohave joinedus recently.Takea lookat theenthusiasmthatradiatesthrougheveryoffice.Takealookatthemoraleofthepeoplearoundyou—itisalmostoffthechart.
Thisplaceisrockingandourjobistokeepitrolling.Everythingisgoingourway.OnJuly1,1992thescoreisnothingtonothing.Joinmeinseeingthatweset new records. If we have another record breaker, maybe we can get themultipletosix.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:August13,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Youarecorrect!ItisexcitingtobeassociatedwithBearStearns.
The first sixweeks of our new fiscal year have been a continuation of lastyear’srecord-breakingperformance.ToptalentcontinuestojoinusanditlookslikeourheadcountwillsoonexceedthenumberweemployedinOctober,1987.
Theonlythingsthatcanstopourtrulyfabulousfuturearearrogance,egoandconceit. Bigger and more promising companies than Bear Stearns have beenreducedtorubblebythoseeasilyacquireddiseases.
Thejobofmanagementistospotthesestupoveteers*andstepalloverthem.Wejustcannotmissifwestickbytherules**andconduct**thatgotustothisparty.
Ourbalancesheethasgrown.
Ourprofitshavegrown.
Ouremployeenumbershavegrown.
Wearegoingtobedifferent—ourhatsizesaregoingtoremainthesame.
*AclevernewadditiontotheEnglishlanguage.Thewordisacombinationofstupid,povertyandthethreemusketeers(arrogance,egoandconceit).
**IfyoudonotknowtheworksofHaimchinkelMalintzAnaynikal&Nookie,youareworkingforthewrongfirm.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:October9,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
The first twoweeks ofOctober have come andgone. Imayhave had amoredifficult14days,butfranklyIcannotrememberwhen.
Anassociateofmanyyearshas resigned,we settled a lawsuit for a ridiculousamountofmoney, themarketshavebeendifficultandasa resultwehavehadsometradinglossesthathavenotbeenfun.
IamnotdiscouragedbecauseluckilyperiodslikethisarecoveredbyasayingofHaimchinkelMalintzAnaynikal,andIquote:
“Youcannotflywiththeeaglesandpooplikeacanary.”
Our losses have been taken, ourminds are clearer and our job now is to getrollingintherightdirection.Thequarterisonlyfourteendaysold!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:November19,1992TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
ThesearetoughtimesformanyAmericansandIamsureyoureceiveasmanyresumesasIdo.
I thinkweshouldall followsomesimple rules.Whenwegeta resume,eitheryouoroneofyourassociatesshouldcallthepersonwhosentittoyouandsaythatitwasreceivedandthatitwillbeprocessed.Ifaresumeispassedontoyouforafinaldetermination,itisessentialthatwenotifytheapplicantthatheorshehasbeenacceptedorrejected.
Willtheseprocedurestakealittletime?Theanswerisyes.Butifamemberofyour family was applying for a job wouldn’t they appreciate these commoncourtesies?Rememberonething,today’sapplicantcouldbenextyear’sclient.
Using these simple considerationswillmakeus standout evenmore from therestofthepack.NobodyeversaidweweretraditionalandIamproudofit!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:February5,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
We need your help. Please help us get amessage out to every associate. It isessential thatonceagainwestress thatwewelcomeeverysuspicionor feelingthatourco-workersmighthaveaboutsomethingtheyseeorhearthatisgoingonat Bear Stearns that might not measure up to our standards of honesty andintegrity.ThisshouldbeaH.M.A.*crisis-controlyellowwarning.
WewantpeopleatBearStearnstocrywolf.Ifthedoubtisjustified,thereporterwill be handsomely rewarded. If the suspicion proves unfounded, the personwhobroughtittoourattentionwillbethankedforhisorhervigilanceandtoldtokeepitup.
Forgetthechainofcommand!ThatisnotthewayBearStearnswasbuilt.Ifyouthink somebody is doing something off the wall or his/her decision-makingstinks,goaroundtheperson,**andthatincludesme.
HaimchinkelMalintzAnaynikaloncesaidthatasuccessfultransactionhasmanyfathersbutadumbdecision isanorphan.Wewantourpeople to tellusof theboneheadsorpotential improprietiesquickly!Get thesemessagesout loudandclear.
*AbbreviationforHaimchinkelMalintzAnaynikal.
**Wehavehadsomeseniorpeoplewhoresented“endruns.”Theyquicklybecameassociatedwithmoreconventionalfirms—youcandrawyourownconclusionsaboutwhethertheircareerchangeworkedoutforthebest.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:February12,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Haimchinkel Malintz Anaynikal just finished speaking at an importantsymposium held at Harvard for the CEOs of major U.S. corporations. Hisappearance created such a huge demand that Harvard had to restrict theattendancetoofficersfromAmericancompaniesthatlostatleast$3billionlastyear. We did not meet the tough entrance requirements, but I did hear somethingsabouthisspeechthatIthinkbearrepeating:
1.Heisastrongbelieverthatpeoplewhotalktoomuchseemtohavebadluck.2.Peoplewhodonotreturnphonecallspromptlydonotseemtomakethegradeatahighlyprofitablefirm.
3.Peoplewhoobjecttoendrunswillnevermakeitinfootball,orwithsuccessfulinvestmentbankingfirms.Certaingroupsdoneedtoobservea“chainofcommand”atmosphere,buthighlymotivated,intelligentpeopledonotneedthishandcuff.
4.Afirmthathasenthusiasticreceptionistsandtelephoneoperatorsstartsoffwithatremendousadvantageoverthedummiesoftheworld.KeepinmindthatthefirstimpressionpeoplereceivefromBearStearnsiswiththoseassociates.
5.Ifabusinesspersonhastoaskhisaccountingdepartmentifheismakingaprofit,hewillnotbeinbusinessverylong.
These five statements created an atmosphere of confusion and incoherenceamong the attendees.As a result, Harvard is being forced to invite the groupback for workshops. These workshops will be led by Haim’s nephew, ItzhakNanookPumpernickanaylian,andbyHaim’stwinnieces,theMeeskeitsisters—
SalamiandPastrami.
Haimchinkel Malintz Anaynikal is not optimistic about his message gettingthrough.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:April7,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectors,All
DepartmentHeadsFROM:TheExecutiveCommitteeRE:DennisHom
DennisHomstartedtoworkatBearStearnsinMay1987at theageof22.Heprogressedrapidly inElliotWolk’sdepartmentandmademanyfriendsatBearStearns.Lastweek,Denniswaskilledbyanautomobileashewaswalkinghomefromthetrainstation.Dennisleavesawifeandtwolittlegirls.
TheHomfamilyboughtahomeseveralmonthsagoandthereisamortgageof$181,000 outstanding. The Executive Committee feels very strongly that thisyoungfamilyshouldnothavetofacetheburdenofthismortgage.
Manypeople have askeduswhat they coulddo forDennis’ family.Let us allparticipate in an old-fashionedmortgage-burning ceremony. Bear Stearns willpay$150,000towardsretiringthisobligationandwethinkitshouldbeeasytoraisethebalancefromhisassociatesatBearStearns.AllchecksshouldbemadepayabletotheDennisHomFundandsenttoElliotWolk.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:April12,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
OurearningsforthethreemonthsthatendedMarch31,1993werespectacular.
FifteenyearsagotheEquityCapitalofBearStearnswasabout40million(andwewererollingabigtaxdeferral).Weearned$110,000,000.00aftertaxesinthelastquarter!Thatisamazing.
Our earning power has changedmaterially, but some things have not changedonebit:
1.Wehavenomorelayersofmanagementnowthanwehadin1978.2.Westillrealizetheimportanceoftryingtocutexpenses.3.Westillrealizehowimportantitistobeonguardagainstconceitandarrogance.
4.Westillaredeeplyconcernedaboutthewell-beingofeverypersonassociatedwithBearStearns.
We have momentum and our morale has never been higher. Our future isunlimited as long aswe rememberwherewe came fromandhowwegot thismachine to its present level. Remember, Haimchinkel Malintz Anaynikal iswatching.Stepoutoflineordisregardhisteachingsandyouwillmakethatoldman’sday(andmine).
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:April15,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
I had a call lastweek fromNookie congratulating the firm on our “best everquarter.”However,Nookie remindedme that “Pridegoethbefore a rapon thesnout.”Hesaidthatdespiteourrevenueswestillneedtowatchexpenseslikeahawk.
He told me, as an example, that those using laser printers and fax machinescouldget5%to10%morelifeoutofthetonercartridgesjustbyfollowingthemanufacturer’s directions. When the toner is low, just take the cartridge out,shakeitandgiveitanothertry.Ifwecouldgetjust5%moreuseoutofourtonercartridges,itwouldsavethecompany$15,000ayear.
Nookiealsomentionedthatthefolkswhodon’twanttoworkforalivinghavecomeupwithanewwaytosteal.Apparently,theycallyouandsaytheyhaveareportofsomekindofproblemwithyourPCorFaxorsomeotherkindofofficeequipment. They then ask for the serial number of the equipment. Shortlythereafter,theyshowupdressedinsomekindofuniformandeitherwanttotaketheequipmentwiththemorworkoniton-site.Youknowwhathappensnext.
Shouldyouexperiencesomethinglikethis,callSecurity(x4333atParkAvenueor x1147 atMetroTech) and alert them of the contact. Theywill take it fromthere.Needlesstosay,neverletanyoneworkonyourPCunlesstheycanshowyouavalidBearStearnsvendorID.
LookslikeNookie isstillat the topofhisform.Pleasesee that these thoughtsgettoeveryassociate.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DateMay12,1993ToAllEmployeesFromSteveLacoffCCSubject
The attached letter was sent to Ace by Lisa Hom to be distributed to allemployees.Pleasetakeafewminutestoreadthisbeautifulthankyou.TO:AllEmployeesFROM:LisaAnnHom
Iwish toextendmygratitude to theExecutiveCommittee for theopportunity toaddressallof theemployeesofBearStearns.
Asyoumaybeaware,DennisHom,myhusband,wasavictimofatragicautomobileaccidentontheeveningofMarch24.HeregrettablypassedawayonMarch30asa resultofsevere injuries fromtheaccident.
Dennis,myselfandourdaughters,Jessica-6andLauren-4,hadjustmovedfromanapartmentinAstoria,Queens intoanewhousewebought inAlbertson,LongIslandonMarch6. Iamsure ifyouhaveevermoved fromonehome toanother,youareawareof theheadachesandconfusionyouhavewiththelogisticsofmoving.Itseemedthatalltheproblemsthatcouldhavearisenhappenedtous.
Consequently,withsuchashortperiodgoneby(approximately2weeks)fromthetimeofourmoveuptothetimeofDennis’accident,hedidn’tevenhavethechancetoreallyconsiderobtainingmortgagelifeinsuranceforhimselfonthehouse.ForthepeoplewhoknewDenniswell,I’msureyou’llagreethatthis was something he would definitely have purchased very soon after our move. However,unfortunatelyformyfamily,hedidn’thavetheopportunitytodoso.
Therefore,IwishtoofferaspecialthankyounotetoAlanGreenbergandtheExecutiveCommitteefor their initiativeand leadershipefforton thedrive tohelpuspayoff themortgagenoteon thenewhouse.ButequalthanksalsogoestoalloftheemployeesofBearStearns.
Andagain,onbehalfofmydaughtersandmyentirefamily,wewishtoexpressourdeepestandmostsincere“Thankyou”andappreciationfor thelove,careandsupportyouhaveshowntousduringthismostdifficultandsorrowfulperiod.
Wecannotadequatelyexpressourheartfeltgratitudetoeachandeveryoneofyou,butpleaseacceptourmost sincere feelings of appreciation and love. The concern and devotion provided to us by theemployeesofBearStearnsisoverwhelmingandverycomforting.
Yourkindnessandgenerositywillneverbeforgottenbythisfamily.Weareeternallygratefulforthegenuinecareandconcernyouhaveexpressedtous.Iknowmyfamily’slovingfeelingsandmemoriesofDenniswillendure the testof timeandwill last forever inourheartsandminds. IhopeyouwillalsocherishyourfondestmemoriesofDennis.
Finally, I amverygrateful thatDennishad theopportunity toworkwith suchwonderful,kindandcaringpeople.WewillalwaysconsiderthepeopleofBearStearns-notjustasDennis’fellowemployeesbutverygoodanddearfriendsofourfamily.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:July1,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Anotheryearhascomeandgone.ItwasprobablythebesttwelvemonthsinthehistoryofBearStearns.
Therearemany thingsabout1993 thatweregratifying,but themomentumwedeveloped throughout the year and the way it seemed to reach a crescendoduringthelastquarterwasthrilling.Thisplaceisjumping!
Oneofthebasiclawsofphysicsisthatobjectsinmotiontendtostayinmotion.Your Executive Committee believes in physics, but it also believes inHaimchinkel Malintz Anaynikal. All of us have to work to keep this placerolling.Clientsarenot interested inourpast triumphs(that iswhy90%ofourcompetitionhasdisappearedoverthepast20years).Clientswantservice,ideasandtenderlovingcare.
Thenewyearishereandrememberthatrecordsaremadetobebroken.Letusgettenrunsinthefirstinningandthenknockthecoverofftheball!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:August9,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Aboutamonthago I congratulatedallofyouon the fiscalyear that endedonJune30,1993.
IpointedoutthatIwouldlovetoseeusstartfiscal1994withabangandgetalotofrunsinthefirstinning.Julyhascomeandgone;soitispossibletogaugeyourresponsetomyrequest.Youreffortsexceededmywildestdreams!
In fact ItzhakNanook Pumpernickanaylian (Nookie) expressed a fear that wemight be peaking too early. Haimchinkel Malintz Anaynikal stepped in andexplained that due to Nookie’s inexperience he was confusing peaking withmomentum.
Keepitup!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:September23,1993TO:SeniorManagingDirectors,InstitutionalEquityDepartmentFROM:AlanC.Greenberg
DickFaywasadearfriendandcolleague.Dickdiedashorttimeago,andsomeof his friends and family are establishing the Richard J. Fay ScholarshipEndowmentFundatFordhamUniversity.
Thegoalistoraise$100,000andtheyhavesofarreceivedthreepledgestotaling$30,000.
Ifyouwouldliketoparticipateinperpetuatingthenameofarealfriend,andatthesametimehelpingqualifiedyoungpeople,pleasegiveLisaD’Amoreacallonx4608.
DearEmployee,
Infurtheranceofitspolicyofencouragingcharitablegiving,Bear,Stearns&Co.Inc.isallowingtheuseofitsofficefortheenclosedcharitablesolicitation.TheFirmpasses no judgement on the request or the organization involved. Participation isentirelyvoluntary.Youshouldnotfeelanyobligationorpressuretocontribute.Ifyouarenotinterested,simplyignoretherequest.
TheCompensationCommittee
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:September24,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:AlanC.Greenberg
Duringthelastfewmonthsthebusinesscommunityhasbeenexposedtosomenewmanagement tools. They are known by the cognoscenti as Total QualityManagement (TQM), Continuous Improvement (CI), Business ProcessReengineering (BPR) and Other Trading and Organizational DevelopmentInitiatives(OTAODI).YourExecutiveCommitteeisalwayslookingforwaystoimproveourperformance,andthosetitlesintriguedus.
We appointed a committee (C) consisting of Haimchinkel Malintz Anaynikal(HMA) and ItzhakNanook Pumpernickanaylian (INP) to do a comprehensivestudy.Wethoughtyoumightbeinterestedintheresults.Fromnowonwewillusethejargonofadvancedmanagement.
The“C”discovered thatwehave lost90%ofourcompetitorsover the last20years. Most of those managements were precocious; they were using thosecatchytechniquesyearsago.
35%usedTQM25%usedCI20%usedBPR10%usedOTAODI
Theremaining10%didnotuseanysophisticatedmanagementtools,theywerejustextraspecialstupid.
The“C”suggestedthatwesticktocommonsense(CS)becausecatchytitleswillneversupplant“CS.”Ifyoudisagree,youareworkingatthewrongplace.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:September30,1993TO:SeniorManagingDirectors,ManagingDirectors,AssociateDirectorsFROM:ExecutiveCommittee
Investment Banking Firms have been plagued over the years by tradersmismarking positions, and we have not been spared. My guess is that themiscreantsarehidingaloss theyhopewillgoaway,butasyouknow,thelossusuallygetsbiggerandtheresultisbad.Itisatributetotheoverridingstrengthofourbusinessthatwehavebeenabletoabsorbthesecrimesandstillprosper,butthisnegativevigorishmustbestopped.
ForthepastmonthstheheadsofeverydepartmentonMondayshavewarnedthetroopsofthedangerofmismarking.Wearenowaddinganadditionalrefinementto the process. Consistent with our goal of trying to help everybody at BearStearnstobecomericher,wewillgivefivepercentonthespottoanypersoninthetradingareaswhoalertsustoapotentialnegativemismark.Ifthemismarkshows a loss of one million dollars, the cooperating person will get $50,000immediately.
Allsuspicionswillbetreatedconfidentially.IfonewishestocallMarkLehman(ext.2549),insteadofsomeoneinhis/herownarea,thatisfine.Noonewilleverbecriticizedforfalsealarms.
Wewouldfrownuponthetattlersharingtherewardwiththemismarkerbasedonsomeprearrangedplot.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:October25,1993TO:SeniorManagingDirectors,ManagingDirectorsandAssociateDirectorsFROM:AlanC.Greenberg
On June 12, 1983, theNewYork Times had a rather large article about BearStearns.Therewereacoupleofquotesinthepiecefromourcompetitorsthatwetookumbragewithandtold theminwritingwhatwethought.Belowisoneofthequotes.
“‘BearStearnshasdoneanintelligentjobofseekingsegmentsthatmostpeoplefoundtobetoosmall,specializedorevenvaguelyrepellent,’saidGeorgeL.Ball,presidentandchiefexecutiveofficerofPrudential-BacheSecurities. ‘Most firms will, at times, forgo profits for reasons ofperception.ButBearStearnshastheideathata legitimatetransactionisone that earns a dollar—even if it’s something youdon’twant to bringhomefordinnerwithmother.’”
As Haimchinkel Malintz Anaynikal has mentioned so often, “what comesaround goes around.” Nookie added something that was particularly poignant—“youmeetthesamepeopleonthewaydownthatyoumetonthewayup.”
We have constantly stressed that people at Bear Stearns do not denigrate ourcompetition.YourExecutiveCommitteewants to reemphasize thatposition. Ifyoucannotsaysomethingniceaboutsomebody,donotsayit!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATEDecember15,1993TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
According to thepress, it is gettingharder andharder to run a largebusiness.Your Executive Committee was making every effort to understand the newmanagementtools.Iamspeakingof:
1.Reengineering2.TotalQualityManagement
3.EconomicValueAdded
Itnowappearsthat,andIquotefromaprominentbusinessweekly,“Hierarchyisdying.Inthenewcorporatemodel,youmanageacross—notupanddown.”
Thisstatementseemstometohavemanyramifications,includingseveralnewmodelsforthecorporatechart.Becausethingsarechangingsoquicklyincorporatemanagement,wehavedecidedtodelayourstudyofthenewtechniques,standbackandwaitforthingstosortthemselvesout.Maybethebusinessschoolguruswillcometotheconclusionthatthebestbusinessmanagementtooliscommonsenseandlookatallthetimewewillhavesaved.
Ihavealwaysthoughtthatbecauseofourmanagementstylewehaveachanceinlife,andafterreadingthecurrentnonsenseIamconvincedthatwewillcontinuetobeevenbiggerwinners,ifwecontinueto:
1.Watchexpenses
2.Workforourclients
3.Keepourfeetonthegroundandourheadsonstraight.
Ourresultswillcontinuetoamazethebusinessschoolsandmaybetheywilltrytofigureoutourrevolutionarymethods(theywillnotbeableto).
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:March11,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
IfyouansweratelephoneatBearStearns,youareveryimportanttoourpresentandtoourfuture.YourvoiceandenthusiasmrepresentthefirstimpressionmanypeoplegetofBearStearns.ThisisnotthefirstmemoIhavewrittenabouttheimportanceofthesepeople,butIgetthefeelingthatacertainslippagehasdeveloped.
LastweekNookieunfortunatelygotinvolvedwithsomebodywiththepersonalityofawetnoodlewhousedtheexpression“thatisnotmyarea”anddroppedhim.Wearelookingforenthusiastic,helpful,short-holdtimes,quicktransfers,inotherwords,peoplewhotry.
Attachedisabrochurethatmademeonceagainthinkofthesubject.ItwasnotwrittenbyHaimchinkelMalintzAnaynikal,butitcouldhavebeen.Pleaseseethateverybodyinyourareareads*thispamphlet.
WEAREGOINGTOPROJECTAPOSITIVETELEPHONEIMAGE!
*Ifsomeofyourhighlypaidkeypeoplecannotread,pleasereadittothem—itisaveryshortdocument.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:April19,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Itisworking!AttachedisamemowhichisdatedSeptember30,1993.Pleaserereaditandyouwillgetmypoint.Therehasbeenonerefinement.Innocasewilltherewardexceed$1,000,000.Thiswilldiscourageslowreportingbasedonthefreeoptionprinciple.
Duringthelasttwomonths,wehavedistributedtwocheckstopeoplewhoreportedmismarkings;thelastonewasfor$65,000.00.Inbothcasestherecipientswerereportingcertainlapsesoftheirbosses,sonotonlydidtheygetacheck,buttheyreceivedanimmediatepromotionbecausetheirbossesnolongerworkforus.
ThiswasacollateralfeaturethatIdidnotthinkofinmyoriginalmemo,butIthinkeveryassociateofoursshouldnowrealizetheyhaveanaddedincentiveforwatchingtheconductofthepeopletheyworkfor.
Inmyparticularcase,Ihavenoticedarecentamountoftremendouscuriosity,attentivenessandattentionlavishedonmebyLisaandMaureen.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:May9,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Themarketsareratherturbulentandwedoalotofbusinessinsecuritiesthatarenotlistedonnationalexchanges,suchasover-the-countersecurities,somebonds,mortgagesandderivatives.Itisveryimportantthatclientswhoownthesesecuritiesandcallusforanindicationofthemarketbegiventhemostaccuratepricesthatwecandetermine.
Somerecentpublicityhassuggestedthatsalespeopleatanotherfirmwereafraidtorevealtoaclientthedropinvalueofasecurity.Ifweeverfeelthatoneofoursalespeople,becauseofpressurefromtheclientorhisorherownstupidity,givesaclientamarketindicationthatmasksthetruepicture,wewilltakethefollowingaction.Wewillaskthesalespersonpersonallytobuy$1,000,000worthofsecuritiesattheoverlyoptimisticprice.*Therewillbenofines,justthissimpletransactionfollowedbyadisciplinarymeetingwithveryseniorpeople.
IfIwereasalesperson,IwouldbeverysurethattheindicationthatIgavetotheclientcamefromanauthorizedpersononthetradingdesk.Ifthatprocedureisfollowedandthepriceindicationiswrong,thesalespersonisabsolved.
*Ifthemarketatthetimeofdiscoveryishigherthanwhenthefictitiousquotewasgiven,thesalespersonwilljusthavethepleasureofthemeeting.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:May24,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
TwoBearStearnsemployeeshavecalledmewithinthelast24hourscomplainingaboutthefailureofotherBearStearnspeopletoreturnphonecallspromptly.Theshy,littlecomplainerswouldnotgivemethenamesofthemiscreants,whichofcoursedeniedmethejoyofspeakingtotheculprits.
Therearealotofthingsaboutourbusinessthataredifficultandsomethingsareoutofourcontrol,butreturningphonecallsissomethingwecancontrol.Wehavehadalotofnewpeoplejoinourorganizationduringthepastyearandmaybetheyarenotawareofhowstronglywefeelaboutreturningphonecallsfromclientsandassociates.Duringthebusinessdayeveryphonecallshouldbereturnedpromptly,evenifthepersonissellingmalaria.Whatpeopledoaboutreturningphonecallsthatcometotheirhomeissomethingoutofourcontrol(IreturnallphonecallsassoonasIcanregardlessofwhereIamdomiciled).
IcanonlyrepeatwhatIhavesaidbefore.IfyouwanttoreallymakemydayandgivemepleasurewhichIamprobablynotentitledto,justletmeknowwhensomebodyatBearStearnsdoesnotreturnaphonecallpromptly.Youwillalsobehelpingusstayaheadofourcompetition.Theyaretooinvolvedinlong-termstrategicplanningtoworryaboutsomethingassillyasreturningcalls.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:July20,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Today’sNewYorkTimesdisclosedthatamajorcompanyhasdeclared“matrixmanagementinourcompanyisdead.”Thepresidentofthatcompanysaid“thatstatementismonumental.”Imustadmitthatthecompanyinvolvedwiththatstyleofmanagementcannotbefaultedfornotgivingitafairtrialbecauseoverthelastfouryearsthistoolhashelpedthemlosefourbilliontwohundredmilliondollars.
Thecompanyisnowgoingtotryputtinginplace“asystemthatmakesitstopexecutivesmoreclearlyaccountableforthesuccessorfailureoftheirdivisions.Nomoreinterminablemeetingsbeforemakingdecisions.Nomoredelaysinreplyingtoacustomer’scallforhelp.”ThisarticlemademerealizehowstupidIambecauseIdidnotknowtherewasanyotherwaytorunabusinessbuttomakepeopleaccountable,maketimelydecisionsandservicetheclient.
Anotheryearhascomeandgone.Itwasexcitingandcertainlyoneofourbetterefforts.Wehadmajordisappointmentsfromcertainassociates,butmaybeitwillhelpusrunatightershop.Ourgoalstillremains—ahighreturnonequitywithintegrity.
IhopeyouarelookingforwardtothenewyearwithasmuchenthusiasmasIam.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:July28,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
TheBearStearnsfiguresfortheyearendingJune30tharenowhistory.Thefactthatourearningsfortheyearsetanewrecordwasratherhiddenbythepressbecauseourfourthquarterwasdownversuslastyear.Allofuswouldhavepreferredthatourfourthquarterwouldhavebeenthefirstquartersowecouldhaveshowedaniceprogression,butwehavetoplaythecardsthatweweredealtanditcertainlywasatremendousyear.
Afewyearsagoindexarbitragewasaccusedofeverythingfromthebearmarkettotornadoes.Itwasaconclusionbasedonignoranceandwetookadefinitestandforwhatwethoughtwasaverylegitimatepartofthebusiness.Whenwasthelasttimeyouheardacriticismofindexarbitrage?Wearehearingthesamenegativethingsnowaboutderivatives.
Thereisariskineverythingyoudoandthatcertainlyincludesderivativesandpersonalrelationships.Ithinkoneshouldalwaysbecarefulinwhateverthepersonisinvolvedwith.Mypersonalpointofviewisthatpeopleshouldcertainlystayinvolvedinboth—derivativesandpersonalrelationships.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:August17,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Overtheyearswehavetriedtostressthatthebestsecuritysystemisalertassociates.InternalAuditwillprobablycatchthemiscreantsinthelongrun,butthatcouldtakeyears.Aperfectexampleofwhatwehopeforhappenedlastweek.
MargaretKellyandEvelynHallareadministrativeassistantsworkingintheFuturesDepartment.Oneoftheirresponsibilitiesistomonitorthedepartment’susageoftaxicabvouchers.Incheckinglastmonth’sinvoices,theydiscoveredseveralvoucherssignedbypersonsnotemployedintheirarea.AftercheckingthenameswithPersonnel,itwasdeterminedthatthenamesonthevouchersweretotallyfictitious!
MargaretandEvelyntooktheinitiativetocontactthetaxicompanytodeterminefromwhichtelephoneextensionsthequestionablecartransportationwasordered.Usingthisinformation,theywereabletoidentifyasuspectedemployee.Theythenarrangedforataxidriverassociatedwithaquestionablevouchertocomeuptotheofficeandpositivelyidentifythesuspectashispassenger.OncethiswasaccomplishedalldetailswereprovidedtoSecurity,resultingintheterminationoftheemployee.MargaretandEvelynreceivedacashawardonthespot.
Pleaseseethatthepeopleinyourareashearaboutthis.Youcanalsoreiterateourrewardpolicyregardingreportingacolleague’smismarkingofaposition.ThereareallkindsofwaystomakemoneyatBearStearns.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:September29,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
TherewasanarticleintheNewYorkTimesthismorningaboutamanlivinginAtlantawhorippedoffeverybrokeragefirmthathadanofficeinthatareatothetuneofabout$15million.BearStearnsisconspicuousbyitsabsence.WewerenotamongthosewhogothitbyMr.Morse.
Itisnotacaseofbeinglucky;itisacaseofMikeMargolis,FrankCox(thebroker)andFloydBerger(compliance)decliningtodobusinesswithMr.Morseafterhisfirsttradewithus.EventhoughMr.Morsefulfilledhisobligationsonthattransaction,theboysdeclinedtoparticipateinanyfurtherdealingswithMr.Morse—somethingdidnotpassthesmelltest.Ourpeopledemonstratedthetypeofsuspicion,skepticismandcynicismwewanttoseeinthepeopleatBearStearns.
Whenactingasabrokerweareworkingforaverysmallcommissionsoourupsideislimited.Inallcasesthereishugeriskifourjudgmentiswrong.Nicegoingguys!
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:October13,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
ThefollowingisanexcerptofanarticlethatappearedintheAmericanBankeronOctober6,1994.
“Thegovernmentisdenyingareportthatitisinvestigatingsomeofthebiggestbrokeragefirmsinthecountryformoney-launderingviolations.
TheWallStreetJournalreportedonSeptember21thatMerrillLynch&Co.,DeanWitterDiscover,Inc.,PrudentialSecuritiesInc.,PaineWebberGroupInc.,andBear,Stearns&Co.arebeinginvestigatedbytheU.S.CustomsServiceandtheInternalRevenueServiceforillegalactivityinvolvingwiretransfers.
‘Thereisnoinvestigation’ofthesecompanies,saidMarvinSmilon,spokesmanfortheU.S.Attorney’sOfficefortheSouthernDistrictofNewYork.WhileMr.Smilonsaidheusuallywouldtellareporter‘nocomment’insuchacase,hesaidhewasafraiditwouldbeconstruedasanaffirmationofthestory.”
IamsurewhenyoureadtheWallStreetJournalarticleonSeptember21st,youwereasupsetasIwas.Wewerenevercalledtocommentontheallegationspriortothepublication.ThefactsarethatBearStearnsdoesnottakeinsizableamountsofcashforanyaccount.Thegovernmentdidexaminesomeaccountsseveralmonthsagothathadmoneywiredintothemviacommercialbanks.WehadneverheardanotherworduntilthearticlewaspublishedonSeptember21st.
ItisashamethatthearticleinAmericanBankerdidnotgetthesamecoveragethatthenegativearticledid,butIguessthatislifeinthebigcity.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:October25,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
ItisimportantthatthemanagementofBearStearnskeepup-to-dateonthelatestbuzzwords.IfyoulookatmymemodatedSeptember24,1993,itdiscussed:
•TotalQualityManagement(TQM)•ContinuousImprovement(CI)•BusinessProcessReengineering(BPR)•OtherTradingandOrganizationalDevelopmentInitiatives(OTAODI)
IjustreceivedapamphletdescribingValueMigrationandhowtoprofitfromit.AtfirstglanceIthoughtthearticlereferredtobirdwatching,butsinceIknowofnobirdnamedvalue,mycuriositywasaroused.
Iamnotgoingintohowstupidthethoughtsare,butIdidwantyoutoknowaboutthislatestmanagementtechniquesoifthephraseiseverbroughtupinyourpresence,youcannodandsaythatyoucertainlyheardofthislatestinnovation.Youcanrefertoitinthefuturebyusingitscodename:
•ValueMigration(DUM)
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:October28,1994TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
ThetimingofthememowithregardtoValueMigrationdated10/25/94wasperfect!
IhavejustreceivedaninvitationfromCorporateDecisionsInc.ofBostontoattendaone-daySeniorExecutiveForumonNovember29,1994.Thesubjectoftheconferenceis:ValueMigration:AStrategicFrameworkforSucceedinginthe1990s.
Ifanyofourseniormanagingdirectorswouldliketoparticipate,pleaseletmeknow.Theywillnotbeallowedtoattend,butIwouldliketodiscusswiththeinterestedpartieswhytheywanttoattend,theirphilosophyofmanagingandwhytheyareatBearStearns.Mydirectnumberisx4605.
Itseemslikewereceiveatleastoneinvitationaweektoattendaconferenceregardingthebuzzwordsdescribedinthe10/25/94memo.Ifinditamazingthatweneverhearofaconferencedevotedtoapplyingcommonsensetothesecuritiesindustry.Wecannotmiss.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:January23,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
ThecurrentBusinessweek,datedJanuary30th,hasanarticleaboutabookpublishedtwoyearsagothathassoldtwomillioncopiesin14languages.ThetitleisReengineeringtheCorporation.Ifyoufollowedmyadvice,youdidnotreadthebookandyousavedyourselftimeandmoneybecausetheauthorisnowputtingoutanewbookstatingthatreengineeringisintrouble!
Thewriterconcludesthatthemainreasonreengineeringisnotworkingisbecauseoftheshortcomingsofmanagement.Theauthorgoesontosaythatunlessmanagersknowhowto“organize,inspire,deplore,enable,measureandrewardvalue-addingoperationalwork,reengineeringwillnotwork.”Whatasurprise.HaimchinkelMalintzAnaynikallearnedthatinGoatHerding101(kindergarteninhiscountry).
Thesearetoughtimesandthereisnoeasyfix.Wehavefollowedcertainrulesandpoliciesovertheyearsandweknowtheywork.Theywillworkinthisenvironment,andwewillcomethroughstrongerthanever.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:January27,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Anumberofsalespeople,inallareas,haveaskedustohireamarkettechnician.IhavediscoveredsomebodythatIthinkwillsatisfyeverybodyincludingthoseinchargeofourlong-standingausterityprogram.Thismanwillworkliterallyforpeanuts.
AllwehavetosupplyhimwithispaperandpencilandDoodlesDanenbergwilldohisjob.Wewillthendistributehisgraphs,whichIpromiseyouwillbeasgoodasanytechnicalworkdoneonWallStreet.
Doodleswillnotbehousedat245ParkAvenue,butwillbeavailableforpersonalconsultationifyouwish.Hisresidenceisafewblocksaway.HeisachimpanzeeresidingattheCentralParkZoo.
IamsureallofyouwishDoodlesthebestofluck.HewillreporttoMarkKurland.*
*MarkmentionedtomethatthusfarDoodleshasbeenlessdemandingthananyadditionhehasmadeinthelastfiveyears.Thereisamoralhere.Allofusshouldthinkofbroadeningournew-hirehorizons.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:May24,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Weareveryfortunate,allofusareworkinginafascinating,dynamicorganization.Wehavehiredsomeexcitingnewpeoplethroughoutthefirmandtheyhavebecomeacclimatizedinrecordtime.
Somedepartmentsthatthepresshadwrittenoffarecomingonlikegangbustersandweareclosetorunningonallcylinders.Ourbusinessisgreat!
Idohaveawish—myhopeisthatouroverallbusinessgrowsatthesamepercentageasourerroraccount,whichisacceleratingatarecordrate.Theerrorsareverydemocratic;theyarecommittedbypeopleupanddowntheline.Ifyoudidanautopsy,youwillfindthatinalmosteverycasepeoplearejustplaincareless.Puttinginbuysinsteadofsellsorentering5optioncontractsinsteadof50.Wehavegottodosomethingaboutthisexpensebecauseitcomesrightoffourbottomline.Ifyouhaveanysuggestions,pleaseletmeknow.Youmustmakeapointofdiscussingthisproblemwiththepeopleinyourarea.
Iexpecttoseeamajorimprovement(thelasttimeIbroachedthissubjecttheerrorswentup,butIthoughtIwouldtryagain)withinhoursofthisepistlereachingourco-workers.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:June12,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Agreatnumberofourassociateshavedroppedmenotestellingmeofexcessreportsandstatisticalmaterialthattheyhavereceivedandthattheyfeelareunnecessary.Insomecases,peopleat245ParkAvenuehavereceiveddocumentsfromBearStearnsthroughtheregularU.S.mail.Iamsurethatalotofmoneycanbesavedifwestopthiswastefulness.
Wearegoingtotrytocentralizeandinvestigateeveryincidentofsurpluspaperthatisreportedtous.ThepersontocallisSteveWexmanonx2-6060.
ThanksforyourpastconsiderationandletusseeifStevecanbringorderoutofthischaos.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:July31,1995TO:AllEmployeesFROM:AlanC.Greenberg
Ibelievethereisadirectcorrelationbetweentelephoneetiquetteandearnings.Werecentlyhiredaconsultingfirmtoinvestigatehowquicklyweanswerourtelephonesandhowwetreatcallerswhodialournumbersbymistake.
Thegoodnewsisthatmostemployeesareaccessibleandanswertheirowntelephonewithintworings.Thebadnewsisthatsomeofourcallsgounanswered,thatmanyemployees’telephonegreetingseithersoundrudeorareunintelligibleandthat26%ofallemployeesareunabletoproperlytransferacall.
Wehaveneverhiredpeoplebasedonmuscularcoordination,butmaybeweshouldchangeourpolicysincetransferringacallseemstorequiremoreathleticabilitythansomeofourassociatespossess.Bepreparedforspotchecksonyourtelephonetransferringcapabilities;youwillbejudged10%onspeedand90%onaccuracy.Thosewhoflunkwillgetprivatelessonsfromme.
Itappearsthatinalloftherecentexcitement,someofyouhaveforgottenthatthewayyouansweryourtelephonemaybethefirst—andlast—impressionthecallergetsofBearStearns.Pleasedon’tforgetagain.Fromthisdayforward,Iexpectyoutoknowhowtotransferacallandalsotobepleasantwhenansweringyourtelephoneeverytimeitrings.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:August25,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
Duringthesummer,Fridaysareusuallyquiet—lonelyintheoffice—butquiet.Todaywasanexception.
Anassociateofourswhoretiredin1990hadaskedourpersonneldepartmentforsomeinformationandshewrotemealetterandtoldmethattheydidnotanswerhermanyinquiries.AformerregisteredrepinSanFranciscosaidthatthecompliancedepartmentofBearStearnsinSanFranciscodidnotreturnhiscalls.AregisteredrepinLosAngelescalledmeandtoldmeaclientofhishadcalledthemortgageoperationsinDallasandayoungladytheredidnotreturnhiscalls.Itishardtobelievethatwithalltheemphasiswehaveputontheimportanceofreturningphonecallsthesethreeincidentsshouldsurfaceononeday.
Thereareusuallythreesidestoeverystory,butitwashardformetofindthesidethatputsourpeopleintheright.IspokewiththeareasinBearStearnsthatseemtobelessthanperfectandIhopeIruinedtheirweekendbecauseItriedveryhardto.
Doyourealizewhatanegativeeffectnotreturningacallhasonanassociateoraclient?
UsingtheEnglishlanguageasaprodhasnotworked.Fromnowon,fineswillbeleviedonlazy,inconsideratenon-phonecallreturnees.Pleaseinformthepeoplewhoworkwithyouofthenewpolicy.
Ifyouoryourclientssufferany“telephoneindignities,”pleasecallme.Itwillmakemyday.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:September1,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:TheExecutiveCommittee
Priortotheendofourfiscalyear,wehad256SeniorManagingDirectors.Wealwayshavesomeattritionatthistimeofyearandlosingeightmanagingdirectors(3%)wouldnothavecausedmuchdiscussion,butsixwhoretiredworkedinapproximatelythesamearea.Becauseofthis,therehasbeenalotofcommentandpublicityaboutthesechanges,andtherewillprobablybemore.
TheExecutiveCommitteewouldliketopointoutthatthemortgageareaiscertainlynotwhatitwasintermsofprofitability.Theprofitsofthedepartment,andthereforethebonusesinthatarea,aredownconsiderablyversusseveralyearsago.
Noneofthesixindividualswholeftdidsotogotoacompetitor.Infact,noneofthemhadimmediateplanstogoanywhere.
Mostofthepeoplewholeftfeltthatthefutureofthatareawasratherlimited—ouropinionistheopposite.Afewyearsagopeopleingeneralhadwrittenofftheprospectsofhigh-yieldbondsandtheywerewrong.Afewyearsagothatworldhadwrittenoffbankstocksandwedonothavetotellyouwhatthese“interest-sensitivecompanies”havedone.Rememberthatcliche?Whileothershavereducedtheircommitmenttothemortgagebusiness,weremaindedicatedtoit,andourcompetitivepositionhasneverbeenstronger.Thebigprofitsinthemortgageareawillbeback.
Wesuggestthatyouusethesethoughtsifpeoplequestionyouaboutrecentevents.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:September27,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
AprominentconsultinggroupjustsentmeaninvitationtoattendtheirfifthNorthAmericanFinancialServicesConference.Oneofthetopicsthattheyareusingtoenticeattendanceis“ReintermediationMayPoseAsBigAChallengeInTheNinetiesAsWasDisintermediationInTheEighties.”IthinkIamgoingtoresistparticipatinginthatget-togetherbecauseIdonothaveanyideawhattheyaretalkingabout.
IcouldnotwaittogettotheofficethismorningandtalktotheheadofourInternalAuditdepartment.IwantallbankbalancesandsecuritypositionsthatareheldawayfromBearStearnstobespot-checkedonasurprisebasismanytimesaquarter.Ifwedothis,itishardformetoseehowabilliondollarscandisappear.
Whenaconsultinggroupsponsorsasymposiumthatdiscussesmundanesubjectslikehowtostopmoneyfromflyingoutthefrontdoororhowtogetassociatestocutexpensesandreturntelephonecalls,thenIwillbeoneofthefirsttosignup.
MEMO
FROMTHEDESKOFALANC.GREENBERG
DATE:November13,1995TO:SeniorManagingDirectors,ManagingDirectors&AssociateDirectorsFROM:AlanC.Greenberg
ThemediahasbeenhavingafielddaywiththeproblemsofDaiwaBank.Quot-ingfromNEWSWEEK,“Itwasn’tthattheDaiwadummieslost$1.1billion;itisthattheyliedaboutitanddissedtheFed.Itdoesn’tpaytogettooarrogant.”
Thiswasnotthefirsttimenorwillitbethelastthatwehaveseenwhatarro-gancecanleadto.ThisdangerhasbeenpointedoutmanytimestoallofusbyHaimchinkelMalintzAnaynikal;itshouldbebroughttotheattentionofouras-sociatesonaregularbasis.Ourjobistolookoutforarroganceandstomponiteverytimeweseeitsuglyheadrearingup.
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