In the wake of its historic merger with A.G. Edwards & Sons, Wachovia Securities has announced the richest retention bonus ever offered to reps at a major full-service firm. At the same time, Wachovia Securities, a subsidiary of the nation's fourth-largest bank, is also requesting one of the longest commitments.

For million-dollar producers, the upfront or base part of the bonus plan will pay as much as 70% of their trailing 12-month production. That's equal to the amount UBS paid last year for million-dollar producers when it took over Piper Jaffray and McDonald Investments. Those packages were considered the largest in brokerage history.

Yet the Wachovia deal can get even sweeter. On the back end, Wachovia will pay an additional retention award that can hit a maximum of 30% for the largest-producing reps. Therefore, the total package could come to as much as 100%. (To view an Excel file outlining the plan, click here.)

But to receive that second award, a person would have to stay at Wachovia for 10 years. The so-called "Loyalty Award" is not payable until 2017. By comparison, last year's two UBS merger packages only required brokers to sign five-year contracts.

Wachovia's back-end bonus is a small bone of contention for some Edwards brokers. "If you're 55 or 60 years old [today], you're not going to be here to get that [back-end] money. Older brokers aren't necessarily happy with that," says one East Coast  A.G. Edwards broker. He explains that most producers around him with large books are middle-aged.

At press time, Wachovia spokeswoman Teresa Dougherty said the company was developing a special provision to keep brokers near retirement from getting put at a disadvantage. The plan was not complete.

An executive recruiter who's courting A.G. Edwards' reps, however, has harsher words. "I think [A.G.] Edwards brokers will react to the back-end part with absolute scorn," says Danny Sarch of Leitner-Sarch Consultants in White Plains, N.Y. "Some brokers I've talked to call it, 'funny money.' I think it will be insufficient to glue them to their seats."

The Wachovia spokeswoman didn't take issue with criticism of the back-end bonus. "We've heard that," Dougherty says.

But she calls it a "neat package," not only because of the size of the awards but also because reps can choose several pay arrangements. For instance, there are three ways a rep could take the upfront or base award. First, a rep could take it all at once as a lump-sum loan. That loan would be forgiven after six years if the broker were still with Wachovia. Anyone who chooses that option would get his or her money in November.

On the other hand, a rep may accept the base award in six equal, annual cash payments. The first of those payments would begin next February. (A.G. Edwards' fiscal year ends in February.) A rep loses any future payments if the individual leaves Wachovia.

The third option is that a rep could create any combination of a partial lump-sum loan with cash payments. The only requirement is that it must be paid in 10% increments.

The back-end bonuses or additional retention awards work differently. Five years from January 2008, Wachovia would give an A.G. Edwards rep the retention award in a cliff-vest, deferred income account. That rep could decide how the money would be invested. If the broker is still with the company after another five years, he or she can collect it. If not, the rep forfeits the entire amount.

Sarch finds fault with the fact that the back-end award is based on a person's current production. "There's no graduated vesting here--it all comes at one time," he complains. In other words, the back-end bonus that will be paid in 2017 would be 20% or 30% of a person's 2007 trailing 12-month gross. Yet the broker's production would likely be much larger in the future.

Wachovia executives hope they have constructed a package that will hold the overwhelming majority of A.G. Edwards' consultants. Since the 2003 joint venture that combined the former Prudential Securities with Wachovia, only 3% of Pru's reps with $250,000 or more in production have left. David Carroll, president of Wachovia's wealth management group, said in a conference call that he expects a similar result this time.

"We're offering A.G. Edwards' financial advisors different ways of taking the award," Dougherty said. "We're saying, 'Try us out. See what you think of us.' "

By the way, Wachovia is also paying its existing reps to stay. On the high end, million-dollar producers who have been at Wachovia will receive 35% to remain with the firm. On the low end, $200,000 brokers will earn 10% of their trailing 12-month commissions.