Warren Spector, forced out as president of Bear Stearns Cos last August, may have outdone his former mentor James Cayne as the 85-year-old brokerage firm imploded.

After a spat over politics in 2004, Cayne, then Bear Stearns' chief executive officer, changed the company's deferred compensation plan, prompting Spector to sell $382 million of stock. As of last March, his stake in the New York-based firm had dwindled to 0.06 percent, worth about $8 million when he left.

"In this case, the golden handshake didn't turn into a tin one," said Shaun Springer, chief executive officer of London-based recruiting firm Napier Scott Executive Search Ltd.

Spector, 50, faced Cayne again in a bridge tournament in Detroit last weekend. As the competition was coming to a close, Bear Stearns was being sold to JPMorgan Chase & Co for $291 million, less than the value of its Manhattan headquarters building. Cayne's 5 percent stake has plummeted in value from almost $1 billion last year, when the shares reached their peak price of $170, to about $12 million based on the sale price.

Cayne, who remains non-executive chairman after stepping down as CEO following an $854 million fourth-quarter loss, bested Spector in Detroit, ranking 65th of 3,555 players in the 11-day tournament. Spector came in 146th. The men participated in two legs of the tournament together, though they never played against each other, according to American Contract Bridge League statistics. Cayne, 74, outperformed his former colleague in both series of games.

Cayne blamed Spector for the collapse of two Bear Stearns hedge funds that had invested in mortgage-backed assets and lost $1.6 billion of investor capital last July. The funds' meltdown tarnished the firm's risk-averse reputation and triggered a repricing of mortgage-related securities that has produced more than $195 billion of losses at banks and brokers worldwide.

Before being ousted, Spector was viewed by analysts and shareholders as Cayne's heir apparent.

Instead, Cayne wound up turning to Alan Schwartz, an investment banker and 32-year veteran of the firm. Schwartz continued to negotiate deals after becoming CEO, as recently as two weeks ago being hired by Microsoft Corp to advise on its attempt to buy Yahoo! Inc.

Agencies

(China Daily 03/20/2008 page16)