Morgan Stanley defers more of employees' pay
Investment bank Morgan Stanley is deferring more of its employees' compensation as part of an industrywide move to encourage staff to consider the long-term health of their firms in making business decisions.
January 21, 2011 / 11:52 IST
Investment bank Morgan Stanley is deferring more of its employees' compensation as part of an industrywide move to encourage staff to consider the long-term health of their firms in making business decisions.
In 2010, Morgan Stanley deferred an average of 60% of employees' pay, up from 40% in 2009.For the most senior employees -- members of its operating committee -- the average amount deferred was more than 80%, up from 75% in 2009, the bank said in its earnings report on Thursday.Banks are changing the way they pay staff, in part to get ahead of regulators and other rulemakers.Politicians, activists and others have accused banks of socializing their losses and privatizing their gains, after governments globally provided trillions of dollars of support to banks during the financial crisis.The European Union in December set guidelines that 40% to 60% of banks' bonuses be deferred over three to five years.The US Federal Reserve, among other regulators, is also looking at banker pay.Banks are changing their pay practices in part because self-regulation can be less onerous than external regulation. They are also hoping to better align employees' interests with shareholders' by, for example, discouraging excessive risk-taking.Morgan Stanley awarded employees USD 16 billion of compensation for 2010, up from USD 14.4 billion in 2009. The 2010 figure represents about 51% of the bank's revenue, down from 62% a year earlier.Credit Suisse last week said it plans to defer more staff bonuses and cut cash payouts. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
