Updated:

Jan 14, 2019

Original:

Jan 24, 2011

Bonus Watch '11: A Displeased Morgan Stanley Employee Breaks It Down

Author:

Confidential to James Gorman- you've got some very unhappy junior rainmakers on your hands.

Here is the bullshit way Morgan Stanley calculates a "15% cut" in bonus. It is actually a 15% cut in your total compensation. This totally screws the people that get paid most of their money in salary and hurts the higher paid people the least.
For example; a person that made 150,000 salary and 50,000 bonus under this method is cut to 170,000 total comp so cut the bonus from 50k to 20k (a 60% cut in the bonus) and even worse if they got a raise the previous year.
The person that made 250,000 and 750,000 for a 1,000,000 total comp would be cut to 850,000 so the bonus is 600,000 (only 20% less). If that is not bullshit, I don't know what is.
Most people would be way better off if they cut just the bonus number even if it had to be a 30% or 40% cut at least the lower paid people would not be subsidizing the high bonus people.
So it is not "bonus" down 15% it is TOTAL COMPENSATION down 15%.

Back in January, Morgan Stanley CEO James Gorman sent a simple messages to his employees, who had been grumbling about their pay: STFU or GTFO. "You're naive, read the newspaper, No.1," Gorman told Bloomberg he would say to any members of his staff that wanted to give him lip about their compensation to his face. "No. 2, if you put your compensation in a one-year context to define your over all level of happiness, you have a problem which is much bigger than this job. And No. 3, if you're really unhappy, just leave." Today, in an interview with the FT, Gorman reiterated his stance and added that in addition to reducing compensation for current employees, the bank will likely be drastically cutting pay for future analysts. If anyone has a problem with that, consider applying for a gig at Bank of Mythical Pre-Crisis Era Bonuses. Alternatively, Gorman is happy to discuss a compensation plan in which you'll be awarded shares of his foot in your ass, which vest immediately. In the latest sign of the pressure Wall Street is under to cut costs and address high pay levels, James Gorman, chief executive, said that staff and remuneration would have to be sacrificed as banks cope with lower profits. “There’s way too much capacity and compensation is way too high,” Mr Gorman said in an interview with the Financial Times. “As a shareholder I’m sort of sympathetic to the shareholder view that the industry is still overpaid.” Morgan Stanley itself is already axing 4,000 jobs, 7 per cent of its workforce, by the end of this year. In the new year, Mr Gorman said, the bank will consider its next round of cost-cutting, including lower pay and bonuses. News of further pay cuts, including potentially for new entrants at the investment bank, comes just weeks after Goldman Sachs confirmed it was overhauling its well-known entry-level programme for analysts. Goldman was said to have tired of the number of analysts in the programme who left the bank for hedge funds. Mr Gorman said that Morgan Stanley will probably keep its own analyst programme, but pay could be reduced significantly. Morgan Stanley Chief Warns On Wall Street Pay [FT] Earlier: James Gorman To Employees: STFU Or GTFO

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