Morgan Stanley (NYSE: MS) has kicked off the new year with some aggressive structural changes. According to a new directive, the bank has moved to defer all employee bonuses for top earners – those who make more than $350,000 with a bonus of more than $50,000 over a three year period.
The new orders do not include the compensations paid to the financial advisers. Just last week, the bank announced that it will lay off 1,600 employees from its senior workforce.
Brook Asset Management was up 7.27% for the first quarter, compared to the MSCI GBT TR Net World Index, which returned 3.96%. For March, the fund was up 1.1%. Q1 2021 hedge fund letters, conferences and more In his March letter to investors, which was reviewed by ValueWalk, James Hanbury of Brook said returns during Read More
We discussed the reservations Dan Loeb had on his newly acquired long position, Morgan Stanley (NYSE: MS). The activist investor has criticized the bank’s habit of paying huge amounts in compensation while saying: “…Morgan Stanley is a substantially smaller and simpler bank.”
In the shareholder letter of his firm, Third Point LLC, Loeb said that the average amount of compensation paid at Morgan Stanley in 2011 was $357,000 while bigger banks like, JPMorgan Chase & Co. (NYSE: JPM) paid $251,000 and Citigroup Inc. (NYSE: C) paid $283,000, far less than what Morgan Stanley paid.
These aggressive measures, from CEO James Gorman, appear to be a move by the bank to reduce its expenses and boost returns. Gorman has said on a previous occasion that Wall Street is full of overpaid bankers. The compensation payments were also reduced by 9 percent in 2012 but this time the whole bonus structure has been sliced for the top earning executives.
For those who make less than the threshold, the bonus will be paid in February. Both Loeb and Gorman are happy with each other for now. Loeb thinks that under Gorman’s leadership the bank can achieve a turnaround.