Deferral reversal

8 December 2014 By Antony Currie Follow @AntonyMCurrie

The investment bank will pay dealmakers more up front, reversing a plan that saved money in leaner times not long ago. Ditching a failed bid to change industry norms will cost $1.2 bln. Cutting future expenses, though, should help boss James Gorman reach his return target quicker.

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Morgan Stanley said on Dec. 5 that it would accelerate paying out some deferred cash bonuses from recent years. The firm also will reduce the deferral rate on future bonus payments to 50 percent from 80 percent.

The bank expects the move to add about $1.2 billion to its compensation and benefits expenses for the fourth quarter and the year.

In an email to employees obtained by Reuters, Morgan Stanley chief executive wrote: “Now that our business strategy is in place and the firm’s performance has stabilized, it is time to bring our deferral policy to an appropriate long-term level, in line with the rest of the industry.”

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