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.