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Morgan Stanley bankers will get 40% of their deferred bonuses this year

Squeezed no more (Photo credit: Canadian Veggie)

With Morgan Stanley, Goldman Sachs and JPMorgan all expected to announce bonus numbers this week, news is gradually emerging about the shape of this year's payouts. This afternoon, Reuters reported that Morgan Stanley will be deferring 100% of all bonuses for employees earning more than $350k.

Bonus caps are nothing new. Last year, Morgan Stanley capped cash bonuses at $125k, Barclays capped cash bonuses at only £65k ($104k), Credit Suisse capped them at $278k and Deutsche capped them at $266k. However, Morgan Stanley is now capping bonuses based upon total compensation, which seems to be a first. The new caps will only apply to people earning bonuses more than $50k.

The good news is that the first tranche of Morgan Stanley's 100% deferrals will vest this year. One Morgan Stanley insider told us that the first slice can be converted into cash in May 2013.

We also understand that the deferred portion of Morgan Stanley's bonus will be split into 50% deferred cash and 50% deferred stock. 25% of the cash deferral will be paid in May this year and another 25% will be paid in December. A further 25% will be paid in December 2014, with the final cash payment in December 2015.

Of the deferred stock, insiders tell us Morgan Stanley will pay 25% this year, 25% next year, and 50% in 2015.

As a result, 38% of Morgan Stanley's deferred bonuses can be converted into cash into 2013.

The bank declined to comment.

AUTHORSarah Butcher Global Editor
  • ge
    15 January 2013

    This doesn't make sense. How is the MS deal generous when 100% of the bonus is deferred compared to getting $100K in cash at Barclays or $278 at CS? They are deferred 100% of the bonus if you total comp (not bonus) is more than $350. So for anyone making more than $350 in base plus bonus, the max cash bonus is $0. Far less generous than the others. Either that or the story is unclear.

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