Bankers at Morgan Stanley who stuck around after an infamous 2012 interview with Chief Executive James Gorman are reaping the rewards. The bank is having a banner year, and it’s back to paying its workers handsomely following a successful remodeling of its franchise.
Gorman on Thursday praised his management team for the turnaround, noting on Bloomberg TV that the bank is paying its staff “competitively” with profitability “continuously improving.”
Concentrating more on wealth management, and with smaller, more efficient investment banking and trading units, Morgan Stanley reported third quarter earnings that almost doubled 2013 numbers. The company set aside $12.7 billion in compensation expenses for the first three quarters of the year, up 4% compared to the same period in 2013. From all indications, the fourth quarter is going pretty well too.
“We have a tremendous management team,” Gorman told Bloomberg TV. “I think they’ve been killing themselves for five years turning this thing around and it’s worked. And, God bless them, they deserve all that comes from that success.”
Always one to tell it how it is, Gorman ruffled some feathers last time he made headlines surrounding compensation. In 2012, with the firm struggling and outside pressure mounting around incentivized pay, Gorman was blunt, to say the least, around grumblings over pay cuts.
"I say, you're naive. Read the newspaper, number one,” he told Bloomberg at the time. “Number two, if you put your compensation in a one-year context to define your overall level of happiness, you've got a problem which is much bigger than the job. And number three, if you are really unhappy, just leave. I mean, life's too short."
Not often do CEOs of major corporations challenge their workforce like that, especially in banking where chief executives often go out of their way to keep pay competitive for fear of losing staff. Just look at what Barclays did last year, increasing bonuses despite losing money. Chief Executive Antony Jenkins said he feared a “death spiral” of defections if he didn’t.
Give Gorman credit. He told employees if they didn’t like it, they could take a hike. Those who stuck around are now being rewarded.
The Life of a Losing Trader (eFinancialCareers)
Wall Street trader Raj Mahal describes the feeling of making and losing huge chunks of money, and what it’s like being the office hero and goat.
How To Not Fail the CFA (eFinancialCareers)
Why will you fail the CFA? What should you avoid if you want to be one of the minority who passes?
Traders Marginalized at Goldman (Bloomberg)
Yet another sign that trading businesses are slowing down. Employees in the division accounted for just 36% of the new partner class at Goldman Sachs, down from 44% two years ago. The number of partners rose in every other division within the bank.
But Not At One Company (Bloomberg)
Bond trading has become so automated, opportunities are arising for actual human traders, at least according to one firm. London-based Liquidity Finance has doubled its sales staff at its U.S. office over the last year. Some clients want to chat, apparently.
Mortoma’s Bid Rejected (Dealbook)
Former SAC Capital portfolio manager Mathew Martoma is headed back to jail, for real this time. A court ruled he cannot remain on bail while he appeals his insider trading conviction, though it didn’t provide the exact date he will be forced to surrender.
Citi Bankers Getting Frustrated (Dealbreaker)
Junior bankers over at Citi are sick and tired of reading news clippings about colleagues at other firms getting raises and hearing nothing themselves. Analysts and associates are getting restless, it appears.
Trading Halted at NYSE (WSJ)
The New York Stock Exchange MKT cash equities market was forced to halt trading of nine stocks on Thursday due to an issue with a workstation. Exchanges have had all sorts of issues this year.
Buzz Around the Office
Bag It (Thrillist)
Here the new way people meet one another in New York City. You and 59 other singles get together in the city’s Hall of Science and do some speed dating with a paper bag on your head. The $25 admission comes with four free drinks, so the bags may not stay on for long.
Quote of the Day: “Death, despair, depression. It’s like rooting for the Jets. You know something will go wrong and there is nothing you can do about it.” – former trader Raj Mahal on what it’s like during a cold stretch