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Morgan Stanley to Pay Employees Less Revenue in Bonuses, But More Up Front

The corporate logo of financial firm Morgan Stanley is pictured on a building in San Diego

Wall Street investment bank Morgan Stanley said it would pay a smaller portion of revenue in bonuses to its bankers and traders this year even in a better revenue environment, Reuters said.

The bank reported a drop in fourth-quarter adjusted earnings, missing estimates, as it deferred fewer bonus payouts and unexpected market swings hit its division that trades bonds, currencies and commodities, the report said.

In the past, Morgan Stanley has deferred up to 80 percent of its bonuses. But it said last month it would pay more up front because it was on a stronger financial footing and in a better position to bring its practices into line with rivals, Reuters said.

Morgan Stanley said on Tuesday it would pay 39 percent or less of revenue from its institutional securities business to employees in 2015. Chief Executive James Gorman said in June the ratio would be 40 percent or less, according to Reuters.

The bank’s shares were down 1.7 percent in morning trading.

Last year, the bank set aside more than $5 billion for compensation and benefits, or an average of $91, 500 per employee, up 28 percent from about $71, 500 during the last three months of 2013, the New York Post said.

Like Goldman Sachs and other big banks, Morgan Stanley’s quarterly results fell short of forecasts after it was hit by a year-end trading slump, the Post said.

Net income rose to $1.04 billion, or 47 cents a share, from $84 million, or 2 cents, a year earlier, the report said.

Excluding one-time items, per-share profit was 39 cents a share, compared with analysts’ estimate of 48 cents a share, according to Reuters.

Gorman said he was not concerned about losing talent because of the lower payout ratio. “We get a very attractive employee base coming to this firm and frankly it’s just not an issue, ” he said during a telephone call, according to the report.

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