Morgan Stanley is preparing to change how it pays its top executives, with more of their bonuses coming in the form of deferred stock that could be clawed back in the event of future losses.
The plan, which may be unveiled next month, could result in Morgan brass getting one-quarter of their bonuses in the form of cash for 2009, far less than they’ve received in the past.
In addition, at least 65 percent of their stock awards could be deferred, and around 20 percent of their total compensation would be in the form of stock based on how Morgan’s share price performs against rival banks.
Traders will also see their pay restructured, with the levels more closely tied to the amount of risk their trades pose for the bank. News of the changes under consideration was first reported on The Wall Street Journal’s Web site.
Morgan Stanley’s move follow steps taken by Goldman Sachs earlier this month to pay its top 30 executives entirely in stock.
That decision was fueled, in part, by the public outrage against Goldman, which, after being bailed out by Uncle Sam a year ago, is poised to produce record profits for 2009. While Morgan Stanley’s bonus pool of $14 billion is less than Goldman’s — which is estimated to be at around $20 billion — Morgan Stanley also has faced some pressure to tweak its compensation structure.