Smith Barney made amends with brokers for issuing two disastrous compensation plans this year by releasing details of a generous, simple scheme for 2008.

As of January, 80% of reps at the firm will get more take-home pay, company officials say.

"In every instance, we become the Number One payer on the Street for financial advisors doing a half-million dollars [or more] in production," said Smith Barney's chief operating officer, Kunal Kamlani, as he outlined the pay changes on a conference call with reporters.

Reps with less than $300,000 in annual production, however, will lose income, which is a continuing trend among brokerage firms. At the highest end, the cash grid goes as high as 46% of gross revenues, up from the previous 42%. Add the new deferred compensation bonus, and longevity bonuses to that, and a $5 million producer could keep 59% of his revenues before taxes.

Smith Barney's compensation plan also goes further than any other firm on Wall Street in paying employee reps as they ease into retirement. The company will pay a team member who retires as much as 200% of his trailing-12-month gross production stretched over a five-year period.

"If I was in the middle stage of my career, and was relatively successful—say, bringing in north of $750,000—I'd be pretty happy with this plan," says Jeff Marsden, the vice president and co-founder of PriceMetrix, a compensation consultancy that works with broker-dealers. "I could see a path 10 years down the road where I could leave the business and leave my clients in good hands."

Within the past 12 months, Smith Barney brokers have suffered through two previous modifications to their comp plan.

The unprecedented changes followed a $98 million court settlement over potential wage-and-hour violations. When the firm launched a new comp plan last January, it tried to comply with state wage laws by adjusting broker and sales-assistant pay. The package included a one-time salary payment worth about $28,000 to most reps. Yet the overall comp plan was a bewildering set of giveaways and takebacks. In all, Smith Barney created about 10 levers that both increased and decreased payouts, according to one former manager.

As a result, some brokers stood to lose between $5,000 and $12,000 in income this year. The company will reimburse them over a two-year period.

In the spring, the company tried again and issued a slightly revised plan. But the changes were still confusing. Many reps dismissed them as a way for the company to raise money for the court settlement, although officials denied that.

Last May, Sallie Krawcheck, the chairman and chief executive of Smith Barney's global wealth management group, called the changes "well-intentioned," but "frankly, too complicated." At the time, she promised to simplify and enhance the plan.

In announcing the new package to the press, Kevin McManus, the director of field services for Smith Barney, said, "We listened to our financial advisors."

Under the new plan, Kunal Kamlani said, some reps would realize thousands of dollars in increases while others would take home $1 million more. Meanwhile, he added, the average broker would lose a "couple of hundred dollars" as a result of changes to policies on ticket discounts and expense accounts.

The 2008 compensation package sweetened a policy to reward reps for sticking it out with the company. Reps can get up to 5% for 25 years worth of loyalty. The firm also eliminated a much-maligned flat payout that paid a person only 20% for her first $5,000 in monthly production. And, reps can add as much as another 4% if they contribute to Smith Barney's voluntary stock-purchase plan, the CAP plan.

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