Last year in May, DE Shaw had decided to fire their managing director, Daniel Michalow. The reason he was let go followed allegations he was being sexually inappropriate with several of his female coworkers. His defense is what made the firing more popular. His defense was that he was a jerk and not a pervert.
His reaction to the allegations opened a can of worms about the internal culture of DE Shaw. It was revealed there was a huge coverup of hedge fund behavior that was not normal. With the damage Michalow caused to DE Shaw’s future, others were needing to learn how to come to terms with it.
The firing led to DE Shaw asking employees to make an important decision by the middle of September. They needed to either agree to the newly instated non-compete terms or leave the company. If they chose to leave the company, they would still be able to receive their deferred compensation. This was a huge deal because normally that compensation is forfeited if an employee quits.
So why were the employees given until September? The month coincides with changes that allow the company to fire DE Shaw employees who don’t want to create their own hedge funds. Even though this date matches Michalow’s firing, it still comes off as strange to employees and investors that a shop such as DESCO wants to risk their reputation using the non-compete clauses.
The leadership committee for DE Shaw wants to work towards removing doubt in people’s minds that things are beginning to become more like the late stages of Kremlin at the headquarters of DESCO. In the end, there will be suffering for both the people who decide to leave and those who quit and take the deferred money. The committee is looking to get those employees who stay to sign a pledge of loyalty to the company.