Morgan Stanley employees aren't going to be very happy with their bonus packages this year. Bloomberg is reporting that the company intends to cap cash bonus payouts at $125,000. They'll defer additional bonus money for executives and senior employees, but the poors of the company — employees earning less than $250,000 — will get everything up front. And, in this round, there'll be no cash handed out at all to Morgan Stanley's CEO James Gorman and other members of the operating committee. In total, about 75 percent of pay will be deferred, compared with 60 percent last year. Maybe it's because of the miserable fourth quarter Morgan Stanley and other investment banks had; or maybe Morgan Stanley has a secret cadre of behavorial scientists hidden away in the basement, who are conducting a longitudinal study of the bankers' behavior in an update to the Stanford Marshmallow experiment. Could be either reason, really.
Perhaps Morgan Stanley got the idea from a compensation consultant, one of whom Kevin Roose profiled in DealBook this morning. Alan Johnson, whose past clients have included Credit Suisse and Lehman Brothers, explains that he has to talk banks through their decision with language that makes him sound a little like he's coaching a ninth-grade football team. “You can say to them, ‘You’re being too wimpy this time,’ or, ‘You were being too aggressive last time,’” he explains. This year, he says, bonuses will probably be down as much as 30 percent overall from last year's, but something tells us he won't be calling his clients wimpy for cutting back.