Morgan Stanley Has Considered The Fed's Request That It Cut Executive Bonuses. That Is All.

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The Fed has some "large U.S. financial services firms" by the balls. Morgan Stanley is not among them.

Seven large U.S. financial-services firms, including PNC Financial Services Group, Capital One Financial Corp., and Discover Financial Services Inc., said they are scaling back the maximum bonuses awarded to executives who beat their performance targets, according to regulatory filings.

Late last year, the Federal Reserve began contacting banks about their compensation plans, said a person familiar with the phone calls. In regulatory filings, many of the firms cited the Fed as a reason for changes….

BB&T Corp., KeyCorp, U.S. Bancorp and SunTrust Banks Inc. are the other U.S. firms that cut their maximum performance-based bonuses recently, according to a study set to be released as early as Tuesday by pay-consulting firm Compensation Advisory Partners. The study examined practices at 23 of the largest financial-services firms.

Seven firms kept their performance programs the same as last year, according to the study. Eight others didn't have a plan last year. One securities firm, Morgan Stanley, increased the maximum performance payout after reducing it a few years ago, according to the study's authors. The report points out that Morgan's payout couldn't increase if the company's shareholders experienced a loss.

Regulators Get Banks To Rein In Bonuses [WSJ]

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Bonus Watch '13: Morgan Stanley CEOs

The bad news: James Gorman's pay fell 30 percent this year. The good news: he's now in a position to show employees how to take these setbacks like a man, rather than grumbling like someone who puts their compensation in a one-year context to define their overall level of happiness.

Layoffs/Bonus Watch '12/13: Morgan Stanley

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