Clawback: Morgan Stanley Ups the Ante

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Do you think Morgan Stanley and other banks that adopt wide-ranging bonus clawback provisions are setting themselves up as lawsuit-bait?

If your employer adopted such a system, would it make your own compensation prospects appear siginficantly less attractive? If so, what action might you take?

Where bonus clawbacks are concerned, the writing is on the wall. First UBS, now Morgan Stanley have overhauled their bonus plans by adding three-year clawback provisions - not just for senior executives, but for many traders and bankers.

Make that "most," in the case of Morgan Stanley. Its new bonus system, in which an unspecified but presumably major portion of year-end compensation is deferred and can be taken back later, reportedly covers some 7,000 employees.

Clawback can be triggered if an empoyee is deemed responsible for "a restatement of results, a significant financial loss or other reputational harm to the Firm or one of its businesses," according to a memo from Chief Executive John Mack. The new scheme takes effect starting with this year's bonuses.

It's a lay-up that most other top-tier institutions will follow suit in one form or another.

So, where does that leave you? Post your thoughts below.

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