Posted on Saturday, 23rd January 2010 by debtpreventions
Banks on Wall Street are inserting “clawback” provisions and deferred stock awards to executives in an effort to reduce public scrutiny of excessive cash bonuses.
In a recent filing, Morgan Stanley said its CEO James Gorman will receive deferred stock valued at $5.4 M but no cash bonus for 2009. If he meets certain performance targets, an additional $2.7M worth of stock will be awarded to him.
He will also receive a “clawback” deferred stock that will boost his pay for 2009. However, the bank can reclaim that award in case of any wrongdoing by Gorman. The figure will be announced later this year.
Morgan Stanley announced a $617 million profit in the 4th Quarter from its investment banking and retail brokerage businesses. The bank’s 2009 compensation expenses, including salaries and bonuses, rose 30 percent to $14.4 billion from $11.1 billion in 2008.
Does Gorman deserve the bonus? Yes he does. In fact, even if Morgan Stanley didn’t produce a profit, I still think he deserves it. The $8.1M bonus is minute compared to the banking industry’s recent meltdown. Executives should be retained and fairly compensated while managing a crisis. It’s an incentive to stay focused on the problem and bring out the best ideas.
As an entrepreneur, I understand one truth; you get what you pay for. Even as a debt settlement professional who has been critical of banking executives, I understand bonus packages are necessary in order to keep those who are valuable to the organization. Each person has unique talents and equality discourages a person from becoming their best.
Tags: Bank
Posted in Bank | Comments (2)
January 23rd, 2010 at 5:11 pm
I beg to differ, these execs are rich to begin with, why not put that $$ that they are getting in bonuses into building a better bank? To me, Apple is a fantastic example of how execs should behave; Steve Jobs is already rich, owns stock in the company, but only takes $1 / year for his salary (only because you’re legally obligated to). Mr. Gorman took in $800,000 in 2009 (re: http://bit.ly/6aRGYp) for his salary, what’s the point of a bonus? Is he really doing that good of a job? I don’t believe it + they took TARP $$ too?
January 23rd, 2010 at 5:48 pm
I disapprove the past operations, but I believe he’s being forced into hardwork. I’m sure the position as CEO is stressful at this time. He has to be compensated for his time and effort. The better news is the profits gained in investment banking and retail brokerage.