Reuters: Morgan Stanley to defer high-earners' bonuses

Reuters: Morgan Stanley to defer high-earners’ bonuses

January 24 2013

By Nadia Damouni and Jessica Toonkel and Lauren Tara LaCapra

Exclusive: Morgan Stanley to defer high-earners' bonusesExcerpt:

NEW YORK (Reuters) – Morgan Stanley is taking three years to pay out 2012 bonuses to high-earning employees, three sources familiar with the situation said on Tuesday, a step that will better align incentives with shareholder interests and make it harder for employees to leave.

Banks globally are rethinking compensation as trading volumes sag, tighter regulations cut into profit, and revenues grow slowly, if at all. Barclays and Deutsche Bank.

Morgan Stanley is deferring bonuses for all employees who make more than $350,000 annually and whose bonuses are at least $50,000, one of the sources said. The source said the deferral does not apply to retail brokers.

The long deferral in cash payouts for high earners is unusual, but more banks will likely follow suit, said Joe Sorrentino, managing director of Steven Hall & Partners, a New York-based executive compensation firm.

“Many investors should be pleased by this, but employees might not be.” Sorrentino said.

Deferring compensation can ensure that bankers and traders do not receive high pay for transactions that generate near-term profits and longer-term headaches. Morgan Stanley Chief Executive James Gorman said in June that the bank wants to reward employees in a way that helps bank shareholders.

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