Wall Street’s high-rollers are facing a cash crunch.
Morgan Stanley is deferring cash bonuses for its top executives for three years as new regulations and stricter capital requirements force banks to slash staff and pay.
The belt-tightening moves come as other banks, including UK-based Barclays, are planning to cut bonuses and trim staff in the coming weeks, The Post has learned.
Banks like Morgan Stanley also are facing heightened pressure by regulators including the Federal Reserve and the Office of the Comptroller of the Currency to defer more cash bonuses in an effort to tamp down the sort of perverse incentives that many believe led to the financial meltdown.
AP
President and CEO of Morgan Stanley James P. Gorman.
Bankers this year are widely bracing for smaller bonuses, including cuts of as much as 30 percent in some areas.
Morgan Stanley, which is gearing up to lay off 1,600 of its investment bankers, would defer cash bonuses for all employees earnings more than $350,000 — or those due a bonus of at least $50,000. Lower-paid employees would not have their bonuses deferred.
The high-pay group would get 25 percent of their cash payout in May and then in equal payouts in three successive Decembers, a person familiar with the situation said.
Bankers’ stock awards would vest over three years, starting next January.
Last year, Morgan Stanley chief James Gorman limited bonuses to $125,000 and set the cash-deferral bonus payments to those receiving salaries of $250,000 or more.
“Some execs cried poverty,” hence the increase, according to one person familiar with the situation.
Gorman, who has hitched the company’s success to its 17,000-strong wealth managers, has been thinning its ranks in its volatile investment banking platform.
Activist investor Dan Loeb of Third Point Capital has taken a stake in the company and has been pushing it to lower compensation costs.
Morgan Stanley bankers are due to learn the size of their bonuses on Thursday — a day ahead of the release of the bank’s fourth-quarter results on Jan. 18.
Many of Morgan Stanley’s compensation changes have been aimed at limiting costs and have targeted cutting the fat at its highest levels.
The bank is expected to promote the lowest number of managing directors it has since 2009.
“Morgan Stanley is trying to use all the tricks in its playbook to shrink their size,” said Wall Street recruiter Michael Karp.
A Morgan Stanley spokeswoman declined to comment.
Meanwhile, Barclays is said to be pushing to limit the number of senior managers it elevates as it also moves to trim its ranks.
Under new CEO Anthony Jenkins, Barclays has been aiming to restructure the big international bank, which was whacked by the London Interbank Offered Rate, or Libor, scandal.
That regulatory dust-up forced former CEO Bob Diamond and other top officials to step down.
Jenkins is slated to announce changes at the bank when it releases its fourth-quarter results on Feb. 12.
mark.decambre@nypost.com
Defer madness: 3-year wait for Morgan Stanley cash bonuses
This article
Defer madness: 3-year wait for Morgan Stanley cash bonuses
can be opened in url
http://breatherenews.blogspot.com/2013/01/defer-madness-3-year-wait-for-morgan.html
Defer madness: 3-year wait for Morgan Stanley cash bonuses
