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Morgan Stanley (MS) is deferring the entirety of bonuses for anyone (not including...

Morgan Stanley (MS) is deferring the entirety of bonuses for anyone (not including wealth-managers) earning more than $350K and with bonus of at least $50K, reports Reuters. Compensation is a focus of new investor Dan Loeb.
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  • Sensible Investor
    , contributor
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    Once again, as it has since the disastrous merger with Dean Witter over a dozen years ago, Morgan Stanley is performing magic tricks. Management wants shareholders, clients and shareholders to believe that ANY DAY NOW the firm will turn the corner and rise to its pre Disaster Witter days. The sleight of hand trick with compensation is telegraphing poor management, ineffectual leadership, and a rudderless ship. The firm claims it is flush with cash, yet...here we are, deferring compensation because someone really flushed the cash, or, logically, there would be the funds to pay people.

     

    The firm has been in panic mode since 2008, and really since Dean Witter, which saw a mass exodus of 3,000 brokers from the 9,000 originally at Dean Witter. The idea of offshoring 22% of the firm's ownership to Japan was anything but patriotic, buying pieces of Smith Barney (because the firm can't aford it) while cutting staff, freezing bonuses, and cutting the dividend all show weakness. Rather than address the lack of direction and leadership, the firm finds itself basically struggling to compete with the resources of its much larger peers, all underpinned by banks, a source of capital that MS needs to compete effectively.

     

    I would suggest that MS take a cue from Dell. Go private. Sell the firm to a larger player who can plug the gaps in the business model, and bring in management who understand the complexity of a brokerage, and the need for a compass when finding their way through the labyrinthine regulatory landscape. If I am a client, a prospective broker or employee and I checked the chart of this struggling 77 year old brokerage/investment bank, I'd wince. Management has accomplished nothing except making excuses for a poor market that exists only at Morgan Stanley.
    15 Jan 2013, 08:07 PM Reply Like
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