If you are a banker at Morgan Stanley, you probably didn’t want to pick up yesterday’s paper. Not only is your total compensation likely to drop for 2012, an activist investor is openly questioning whether you’re already overpaid.
Analysts’ forecasts suggest that Morgan Stanley has set aside roughly $15.8 billion for employee compensation and benefits for 2012, down roughly 4% from last year, according to The Wall Street Journal. Average compensation per employee is actually expected to rise, due to a smaller workforce, but that increase can be attributed to Morgan’s brokerage business, which is thriving. Average comp for investment bankers and traders is expected to fall. Oh, and 100% of bonuses will be deferred for top bankers.
Meanwhile, activist investor Daniel Loeb, who runs hedge-fund firm Third Point, a firm known to make waves after taking a position, has criticized Morgan Stanley’s pay structure, particularly for directors, as the firm is a “substantially smaller and simpler bank” than rivals, according to a letter obtained by the Journal.
Loeb has a history of using his leverage as an investor to drive major changes. He helped push former Yahoo chief executive Scott Thompson out after just four months, and created three new seats on Yahoo’s board for his confidants, after winning a bitter proxy fight.
And the final pill to swallow for Morgan bankers? Analysts expect rivals at Goldman to see their take-home pay increase by more than 10% for 2012.
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