Morgan Stanley boss James Gorman taketh and giveth as he rejiggers incentive pay packages for its more than 17,000 brokerage force.
The changes, announced during an internal call to brokers yesterday by head of brokerage operations, Doug Ketterer, better align the so-called financial advisers’ performance with Gorman’s goal of developing Morgan Stanley Wealth Management [formerly Smith Barney] into a big profit center capable of helping the investment bank sidestep choppy markets.
The new plan, which goes into effect at the start of the next year, encourages brokers to beef up their assets under management and loans to high-net-worth clientele.
The moves comes as incentive pay based on revenues for brokers is set to shrink by as much as 2 percent — a change that might irk some employees.
But top broker performers and managers will also be able to purchase shares of Morgan Stanley stock at a 20 percent-to-25 percent discount — the first time the pay package has included the ability to purchase discounted shares, one official noted.
Brokers who have served for at least five years and generate gross revenues of at least $400,000 will be able to participate in the discount-stock program but won’t be able to sell the stock for three years.
During a conference call with brokers, Ketterer described the package as one of the “richest growth incentives offered on the Street,” said one insider who had listened to the 20-minute call.
Sources say that Gorman is focused on building out the overall wealth-management platform, which is run by Greg Fleming, and is interested in retaining only the most stellar producers.
The brokerage operations, of which Morgan Stanley owns a 65 percent stake, are the result of a joint venture with Citigroup.
Fleming is tasked with helping the platform generate a return on equity in the mid-teens — a goal the firm has struggled to accomplish.