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Morgan Stanley Plan Aims at Retention
Oct 3 2006
Morgan Stanley's new incentive plan is meant to attract new talent and discourage the firm's bankers and traders from jumping to rivals. It's the latest move by Chief Executive John Mack to counter the sense the bank's compensation lags its competitors.
According to media reports, the new plan allows staff who earn at least $500,000 to invest part of their annual bonus in Morgan Stanley funds of hedge funds and private equity funds. A banking source familiar with the plans told Financial News the allowed investment would be a "small percentage" of a staff member's bonus.
In addition, the bank will lend qualified employees $2 for every $1 they invest in the funds. If the investments drop in value to the point where equity is wiped out, the loans would be forgivable. The bank is also loosening the rules on restricted stock awards, allowing employees to sell their shares after three years instead of five.
With bonus season approaching, the new plan could help induce staff to stay with Morgan Stanley. Low bonuses often spur bankers and traders to jump to other firms.
Last Week's Poll
Last week we asked what impact you thought Morgan Stanley's new incentive plan would have on the bank's staff. The plan allows those earning at least $500,000 to invest part of their annual bonus in the bank's funds of hedge funds and private equity funds. More than 26 percent of you said the plan will boost retention, while about 12 percent said it will keep retention even. Nearly 22 percent said it will make staffers hesitate before leaving the firm for another job. But more than 40 percent believe the plan will have no impact at all.
http://news.efinancialcareers.com/PAY_ITEM/newsItemId-8013
Any thoughts?
Oct 3 2006
Morgan Stanley's new incentive plan is meant to attract new talent and discourage the firm's bankers and traders from jumping to rivals. It's the latest move by Chief Executive John Mack to counter the sense the bank's compensation lags its competitors.
According to media reports, the new plan allows staff who earn at least $500,000 to invest part of their annual bonus in Morgan Stanley funds of hedge funds and private equity funds. A banking source familiar with the plans told Financial News the allowed investment would be a "small percentage" of a staff member's bonus.
In addition, the bank will lend qualified employees $2 for every $1 they invest in the funds. If the investments drop in value to the point where equity is wiped out, the loans would be forgivable. The bank is also loosening the rules on restricted stock awards, allowing employees to sell their shares after three years instead of five.
With bonus season approaching, the new plan could help induce staff to stay with Morgan Stanley. Low bonuses often spur bankers and traders to jump to other firms.
Last Week's Poll
Last week we asked what impact you thought Morgan Stanley's new incentive plan would have on the bank's staff. The plan allows those earning at least $500,000 to invest part of their annual bonus in the bank's funds of hedge funds and private equity funds. More than 26 percent of you said the plan will boost retention, while about 12 percent said it will keep retention even. Nearly 22 percent said it will make staffers hesitate before leaving the firm for another job. But more than 40 percent believe the plan will have no impact at all.
http://news.efinancialcareers.com/PAY_ITEM/newsItemId-8013
Any thoughts?