Bonus Watch '14: Morgan Stanley

Author:
Bess Levin
Updated:
Jan 14, 2019
Original:
Dec 8, 2014

This could be you.

Exciting news from the House o' Gorman: employees will get more actual money come bonus time, like the kind you can use, touch, roll around in and less of the kind that's just sort of theoretical.

Morgan Stanley said on Friday it will pay more of its bonuses to employees upfront and defer less, because the bank is on a better financial footing and can move its pay practices more in line with those of competitors. The step will increase its fourth-quarter compensation by roughly $1.2 billion. The bank said in a filing with the U.S. Securities and Exchange commission that only around 50 percent of the bonuses Morgan Stanley employees are due in 2015 for their performance in 2014 would be deferred on average, down from about 80 percent previously. "Now that our business strategy is in place and the firm's performance has stabilized, it is time to bring our deferral policy to an appropriate long-term level, in line with the rest of the industry," Morgan Stanley Chief Executive James Gorman said in a memo to employees that was reviewed by Reuters. Its contents were confirmed by a Morgan Stanley spokesman.

Morgan Stanley to defer less of employees' future bonuses [Bloomberg]

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

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.

Since taking the reigns at Morgan Stanley in 2010, CEO James Gorman has guided the firm with a managerial style that boils down to telling people, more or less: You'll get it when you've earned it, "it" being anything from personal space to money to his respect. On the point of compensation, last year he told employees complaining about what they were paid to either open a newspaper and get over themselves or do everyone a favor and quit. Today brings news that this year, he's doubling down on that mandate and daring anyone to make something of it.

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