May is finally here, and with it comes the annual tradition of shareholders and advisory groups complaining about executive pay. First came Barclays, then Coca-Cola, and now Morgan Stanley. The bank received yet another lousy report card from advisory firm Glass Lewis & Co., which recommended shareholders vote no on Morgan Stanley’s compensation plans.
In giving the bank a “D” letter grade for its executive pay practice, Glass Lewis said Morgan Stanley pays its top brass more than competitors – and has for three straight years under the current regime – despite the fact that it trails other banks when it comes to performance, particularly when looking at the bank’s per-share earnings and return on equity, according to the Wall Street Journal.
Not stopping there, Glass Lewis took the bank to task for failing to properly disclose all the business ties of its board members. The company is advising shareholders to vote against the reelection of board member James Owens, the head of its governance committee.
Strangely enough, the D-grade is actually an improvement for Morgan Stanley, which received an “F” last year. So, things are looking up?
Morgan Stanley responded to the report in a letter to shareholders, noting that Glass Lewis based its analysis on unadjusted data that didn’t take into account the value of the bank’s debt. It also backed Owens.
The non-binding vote on pay will take place on May 13 at Morgan Stanley’s annual meeting. The bank likely has little to worry about. Shareholders approved Morgan Stanley’s pay plans last year despite Glass Lewis’s F-bomb.
Bond giant Pimco is looking to hire as many as 16 new equities staffers, split between senior portfolio managers, traders and analysts.
Historically, students haven’t always wanted to join banks’ non-revenue generating divisions. Front office banking jobs have been seen as more glamorous, more lucrative, and more prestigious. According to banks’ own graduate recruiters, that’s all changing.
Lawmakers are pressuring the SEC to bar its employees from owning individual shares of companies, citing potential conflicts of interest. Currently, SEC staffers are forbidden from owning shares in a short list of banks and financial firms.
U.S. companies eyeing big M&A deals in Europe may choose to employ the use of offshore cash piles rather than going through currency markets. The end result would be lost opportunities for hungry currency traders at large banks who are already suffering.
Boutique investment bank Lazard booked $81 million in first quarter net income, powered mainly by a dominant run in M&A. Elsewhere, Lloyd’s had a profitable quarter while Nomura did better than expected, although not when it comes to hiring women.
Former UBS trader John Hughes has been barred from the industry for his role in the 2012 trading scheme that cost UBS $2.3 billion. Hughes worked above Kweku Adoboli, who was sentenced to seven years in prison for committing the fraud.
Banks made so many errors during the mortgage crisis that they quite literally stopped counting and got out their checkbook. A cursory analysis shows that 9% of mistakes involved banks denying loan modifications that would have prevented foreclosures.
Buzz Around the Office
When life gives you lemons, make lemonade. When a flash flood hits, hop on a gigantic bike.
Quote of the Day: “As tapering ends, most likely in October, and the discussion shifts to an impending first rate hike (probably around the time when unemployment is approaching 6% and inflation is ticking higher), we will have to buckle our seatbelts for an inevitably more volatile environment.” – hedge funder Dan Loeb, in his most recent note to clients