Morgan banker quits with no guarantee: Really?

8 December 2005

2 minute read

Morgan banker quits with no guarantee: Really?

Bankers at Morgan Stanley should already be able to taste their bonuses. The investment bank typically announces staff bonuses in mid-December and pays them out in early January.

At this stage in the cycle, therefore, it seems odd that anyone would walk away without some compensation for the disappearing bonus as a result. But the Financial Times says this is precisely what Michael Tory, head of UK investment banking at Morgan Stanley, has done.

Tory is joining Lehman Brothers, where he'll sit on the European management committee. The FT reports that Lehman lured him without dangling a guaranteed bonus. We have our doubts: even given Lehman's rise on European M&A league tables, it would surely take a little more than kind words to entice a bigwig like Tory aboard without a financial sweetener.

And if he really did walk away from a whole year's bonus with nothing in return, what does that say about Morgan Stanley retaining its other senior staff after bonuses are paid? What do you think? Was there a guarantee or some other sign-on? And will Morgan Stanley suffer a mass exodus come January? Let us know what you think.

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3 comments

Ia
Ian
9 December 2005
Here's what Jonathan Ford at breakingviews has to say: It comes down money (what else?) and to Tory not signing the more stringent lock-in contracts Zoe Cruz, John Mack, and most of the other MS bankers have signed, leading (and staying) by example, so to speak. Read more at breakingviews.com.
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Ja
Jason
9 December 2005
As a consultant recruiting across coverage and M&A I would be very surprised to see a 'mass exodus' from MS. They still have a very strong image in the market and with prospective candidates at most levels. They are still a top investment bank in their key markets and as with most companies who experience change, should emerge even stronger (remember CSFB?) From a resource perspective, people who leave probably do not fit the emerging culture, or have hit a glass ceiling and need a move. If Tory left without a guarantee then this must surely be because there was little incentive for him to remain at Morgan Stanley...
Best regards
Jason Smallwood
Investment banking search consultant
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Ia
Ian
9 December 2005
If Michael Tory walked away from Morgan without his bonus and into Lehmans without a guarantee, then he's a sandwich short of a picnic. Anything's possible of course, but you don't climb up the greasy pole of investment banking by playing the role of village idiot. There are two realistic possibilities. Either Tory came to a secret deal with Morgan over his bonus and equities, or Lehmans bought him off. The second is infinitely more likely than the first. What did it cost them? Who knows? But an educated guess would be in the region of five to seven million bucks, guaranteed over two to three years.
For sure Morgan will lose a few more senior bankers in the New Year, but they're a long, long way from meltdown. What the other banks don't realise is that John Mack is serious when he says he wants to hire the cream of the street, and he's prepared to get his chequebook out as well. Watch out for some unexpected departures from some unlikely places come bonus time. And the sun won't be shining so brightly when some of their key rainmakers hitch a lift on Johnnie's wagon.
- A director in a City headhunting firm
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