Currencies broker FXCM Inc. won a lifeline after January's surge
in the Swiss franc almost put it out of business, but insiders are
still bracing for more stress at the firm.
Several top executives have redrawn their contracts to make sure
they are better compensated in the event they are ousted or the
company is broken up.
Chief Executive Drew Niv and his FXCM co-founders David Sakhai,
William Ahdout and Eduard Yusupov have all signed amended contracts
granting them a larger payout if their employment is terminated,
according to filings with the U.S. Securities and Exchange
Commission dated March 17.
"The plan to revise the founders' severance agreements as well
as their incentive bonus plan is part of the company's retention
plans for many of its staff members," said FXCM spokeswoman Jaclyn
Klein, speaking on their behalf. "[The revision is] protecting them
further if FXCM were to be sold and they were to be let go."
FXCM, the largest retail foreign-exchange brokerage in the U.S.,
was sent reeling by a rapid, unexpected rise in the value of the
Swiss franc in January.
Facing $276 million of losses, FXCM agreed a $300 million rescue
deal with Leucadia National Corp., the parent of Jefferies Group
LLC. The terms of that deal mean FXCM must sell parts of its
business.
Under the new contracts signed in March, in case of an ouster,
the four co-founders would get two times their annual base salary
plus their target annual bonus, which is now tied to the progress
made on the repayment of the loan to Leucadia.
"The recent changes announced reveal an elevated level of
concern on the part of the firm's current directors about their
future involvement in the company," said Javier Paz, an analyst at
Aite Group. "These measures could be protective in nature, but they
could also be paving the way for management changes at the top in
order to restore investor confidence on the firm's future."
On April 2, FXCM repaid $54 million of outstanding debt, funding
it partly with the sale of FXCM Japan to Rakuten Inc. The
outstanding balance of the loan is $244 million.
At the end of 2014, the founders and the management owned
approximately 44% of the business, FXCM's spokeswoman said.
Shares in NYSE-listed FXCM now change hands for around $2.15,
having tumbled from around $17 before the mid-January shakeout.
Filings show that William Blair & Company LLC and FMR LLC, two
of the largest institutional shareholders in the firm, have reduced
their holdings of FXCM shares. They didn't respond to requests for
comment.
Mr. Niv reiterated in March that FXCM isn't for sale. "After the
loan is paid off, our plan [...] is to run the business in the long
term and not to worry about the sale of business or things that
we're not planning to do," he said in a call with analysts.
Write to Chiara Albanese at chiara.albanese@wsj.com
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