Morgan Stanley to pay smaller proportion of revenue in bonuses

Tue Jan 20, 2015 11:19am EST
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By Tanya Agrawal and Lauren Tara LaCapra

(Reuters) - Wall Street investment bank Morgan Stanley said it would pay a smaller portion of revenue in bonuses to its bankers and traders this year even in a better revenue environment.

The bank reported a drop in fourth-quarter adjusted earnings, missing estimates, as it deferred fewer bonus payouts and unexpected market swings hit its division that trades bonds, currencies and commodities.

In the past, Morgan Stanley has deferred up to 80 percent of its bonuses.

But it said last month it would pay more up front because it was on a stronger financial footing and in a better position to bring its practices into line with rivals.

Morgan Stanley said on Tuesday it would pay 39 percent or less of revenue from its institutional securities business to employees in 2015. Chief Executive James Gorman said in June the ratio would be 40 percent or less.

The bank's shares were down 1.7 percent in morning trading.

Compensation expenses rose to $5.1 billion from $4.0 billion, with about 41 percent of revenue from the bank's institutional securities business going into bonuses.

While not strictly comparable, arch rival Goldman Sachs Group Inc paid out 36.8 percent.   Continued...

The corporate logo of financial firm Morgan Stanley is pictured on a building in San Diego, California September 24, 2013. REUTERS/Mike Blake