Morgan Stanley gifting cash this year, and more of it
It seems that nearly every tidbit of news involving banker bonuses tends to have at least some negative spin to it. They’re being cut, capped or vested over the lifespan of a Galapagos turtle. Morgan Stanley, in an about face from years past, is bucking that trend.
Last month, the bank announced it would set aside $12.7 billion in compensation for the first three quarters of the year, up 4% compared to the same period in 2013. It appears the fourth quarter will be even more bountiful for Morgan Stanley bankers, who can expect cash gifts rather than an IOU come bonus season.
The bank said on Friday that it will increase fourth quarter compensation by roughly $1.2 billion. Moreover, it will defer around 50% of its bonus pool, down from the 80% it deferred a year ago. With the move, Chief Executive James Gorman is following through on a pledge he made when he slashed compensation following the crisis: get the business back to full health and you’ll get paid.
"The period of fragility Morgan Stanley faced from 2008 to 2012 has, thankfully, ended," Gorman said in the memo obtained by Reuters.
Appearing particularly festive in spirit, Gorman and the board's compensation committee took yet another step to appease employees who waited out the hard times at Morgan Stanley. They are allowing outstanding cash bonuses that had been deferred to vest early.
The memo was likely received better than the comments Gorman delivered on Bloomberg TV back in 2012, when he cut pay below market value in an effort to resuscitate the struggling firm. “If you are really unhappy, just leave,” he said at the time. Those who stayed are probably happy they did.
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Banks haven’t experienced two consecutive months of elevated bond trading volume in more than a year. That ended last week, following strong October and November performances when trading of corporate bonds and mortgage-backed securities was up 15% and 5.6%, respectively. We’re not at trend status yet, but bond traders finally had a good eight-week stretch.
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Buzz Around the Office
This Vine made me laugh out loud.
Quote of the Day: “Especially in sales, you see just how many zero-sum interactions there are. It’s not win-win, it’s win-lose. Not all the interactions were that way, but enough of them were that I quickly became a cynical about it.” – author Michael Lewis on why he left Wall Street