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Morgan Stanley To Cap Cash Bonus At $125,000 (With Footnotes)

Tyler Durden's picture


That after last year's abysmal performance on Wall Street, best summarized by the following quarterly JPMorgan Investment Banking revenue and earnings chart, bonuses season would be painful should not surprise anyone. But hardly anyone expected it to be quite this bad. The WSJ reports that Morgan Stanley, likely first of many, will cap cash bonuses at $125,000 and "will defer the portion of any bonus past $125,000 until December 2012 and December 2013" with bigger 'sacrifices' to be suffered by the executive committee which, being held accountable for the collapse in its stock price, will defer their entire bonuses for 2011. Morgan Stanley is likely just the beginning: "As banks report fourth-quarter results this month and make bonus decisions for 2011, total compensation is likely to be the lowest since 2008." This means that once Goldmanites get their numbers later this week, we will likely see a mass exodus for hedge funds which remain the only oasis of cash payouts on Wall Street. Alas, unlike the Bank Holding Companies, a series of bad decisions will result in hedge fund closure, as the TBTF culture will never penetrate the stratified air of Greenwich, CT. And with bonuses capped at about $80K after taxes, or barely enough to cover the running tab at the local Genlteman's venue, the biggest loser will be the state and city of New York, both of which are about to see their tax revenues plummet. And since banker pay is responsible for a substantial portion of Federal tax revenue, look for Federal tax withholding data in the first few months of 2012 to get very ugly, making America even more responsible on debt issuance, and likely implying the yet to be re-expanded by $1.2 trillion debt ceiling will be breached just before the Obama election making it into the biggest talking point of the election cycle.

But back to the sad fate of banker bonuses and tiny violins:

At Goldman Sachs Group Inc., which, like Morgan Stanley, reports earnings this week, many of the roughly 400 partners can expect to see their 2011 pay cut at least in half from 2010, according to people familiar with the situation. Pay for some employees in the New York company's fixed-income trading business will shrink by 60%, with some workers getting no bonus, these people said.


Morgan Stanley is likely to cut compensation by 30% to 40% for many of its traders and bankers, especially those who focus on fixed income. Stock trading and parts of investment banking will likely be spared from pay cuts, though they are liable to have bonuses deferred.
Senior employees across the board will be affected by the changes in the makeup of the bonus, which for a Morgan Stanley or Goldman


Sachs trader can often outpace the continuing salary, according to the people familiar with the situation. The roughly 40 people on Morgan Stanley's management committee will see 85% of their bonuses deferred, a person familiar with the matter said.

The average of pay deferred, for all employees to whom it applies, will rise to about 75% from about 65% in recent years, this person said.

As for the footnotes:

The firm is taking a different approach with more-junior employees, or those without titles like managing director, executive director or vice president. Those employees, who often use their bonus money for day-to-day living expenses, will see only 25% or less of their overall bonuses deferred. Those employees who are paid less than $250,000 in overall pay won't have deferrals applied to their bonuses.


Of course, Wall Street workers may get paychecks this year from previous deferred bonuses. That will soften the blow somewhat from lower bonuses in early 2012. Morgan Stanley executives and many employees also receive part of their compensation in deferred stock.

Which brings us to another topic: namely the qualitative aspect of weekly initial claims (as opposed to just quantitative). Because while firings this year may have peaked at levels modestly lower than last year, it is the foregone paychecks which this year have soared compared to last year. Furthermore, with banks about to enter 6-12 months of global deleveraging as Basel III is knocking ever louder, the probability that many of the laid off bankers find a parallel job in the space is shrinking by the day. Which is precisely why we are very curious to see what TrimTabs tax withholding data indicates about the quality of terminations and lost jobs, because with the surge in banker layoffs and far lower bonuses, it is very likely that US tax revenues are about to fall off a cliff.


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Tue, 01/17/2012 - 00:02 | 2070115 aaxiom
aaxiom's picture

OMG! What will these poor bankers DO???

Tue, 01/17/2012 - 00:15 | 2070135 TheFourthStooge-ing
TheFourthStooge-ing's picture

Doesn't anyone care about the poor hookers?!

How will the coke dealers be able to send their kids to a good school?

Nobody cares about the human element in tragedies such as this, and it makes me sad.


Tue, 01/17/2012 - 00:26 | 2070153 LongBalls
LongBalls's picture

Hahahahah! It's finally time for those sorry pieces of scum to return their holiday gifts for a change! Hope you kept the reciept blowhards. I love success stories. Especially by those who don't cheat and steal.

Tue, 01/17/2012 - 00:37 | 2070174 SHEEPFUKKER

Welcome to the 99% bankster bitches!!! Now fuck off!!!!

Tue, 01/17/2012 - 00:59 | 2070198 Manthong
Manthong's picture

The LDBB Index (Lap Dance Blow Booze) will plummet to levels not seen since spring, 2009.

Tue, 01/17/2012 - 01:02 | 2070199 Bananamerican
Bananamerican's picture

"Welcome to the 99% bankster bitches!!!"

They're still 99% douchebags and useless gourmands...

See what a year without taxpayer bailouts does to the jerking class?

Soon it will be model planes and bottles of Pabst

Tue, 01/17/2012 - 08:44 | 2070506 Bobbyrib
Bobbyrib's picture

"See what a year without taxpayer bailouts does to the jerking class?"

Operation Twist?

Tue, 01/17/2012 - 01:29 | 2070234 Caviar Emptor
Caviar Emptor's picture

I can feel the frustration and taste the tears. I think we should hold a candle-light vigil outside MS for thenext 5 nights and sing we shall overcome. 

Tue, 01/17/2012 - 01:42 | 2070248 The Big Ching-aso
The Big Ching-aso's picture



I think I'm developing a teardrop in me one good eye.

Tue, 01/17/2012 - 00:19 | 2070143 Gidas19
Gidas19's picture

They forgot to mention that instead of yearly bonuses, there will be quarterly ones!!!!

Tue, 01/17/2012 - 00:11 | 2070122 slewie the pi-rat
slewie the pi-rat's picture

we're sorry!  you've hit the fuking lottery!

well, they stole it fair & square, and at least the stockholders aren't gonna get it...

Tue, 01/17/2012 - 00:36 | 2070133 Oh regional Indian
Oh regional Indian's picture

Just because it's Slewie....

Austerity BeCheeses!!!!


I know a couple of Banskters and they are sweating, sweating!

And as another aside, most people cannot handle the truth.



BTW slewie, I'm sure you've read in serach of the miraculous? Right? Most diffficult lesson there and one you clearly keep falling/failing at : DO Not Display Negative Emotions". Right? I knew you felt like a flake re. the G teachings. It's all clear to me now.

Tue, 01/17/2012 - 00:11 | 2070127 prains
prains's picture

 Those employees who are paid less than $250,000 in overall pay won't have deferrals applied to their bonuses.


just put a fork in me I'm done

Tue, 01/17/2012 - 00:19 | 2070141 centerline
centerline's picture

Is alot of money.  I would wager they are worked like dogs though.  Perform or die.  Fun career choice for sociopaths I suppose.


Tue, 01/17/2012 - 00:51 | 2070189 Rynak
Rynak's picture

From someone who in the past was close to them (and then rejected them).... their lifestyle basically is "spend on the now, and worry about the "then" as well as your "conscience" later"... basically, volatility is their game, hoping that the CURRENT winning spree will never end, while spending obscene incomes like there's no tomorrow.

Not incompatible with "working them like dogs".... the "middle class" of them, would basically imagine themselves as on the highway, when actually they're just controlled tools, disposable as soon as the surplus no longer satisfies their inefficient pay.

And nope, i'm not sorry for them..... good riddance, scum.

Unfortunatelly, i doubt that said "riddance" will happen at all, without a fight. For now, they're plain as simply whining........... cue central banks.


Tue, 01/17/2012 - 00:12 | 2070129 RockyRacoon
RockyRacoon's picture

Well....  That's one way to curb the Wall Street extravagant pay packages.   Not one the oligarchs had in mind, but it works for me.   They'll have to recalculate all those multipliers of how much the 1%ers are superior in compensation to the rabble.   So sad.

Tue, 01/17/2012 - 00:11 | 2070130 centerline
centerline's picture

Sure sucks to be some ivy-league dickhead who just spent a wad of cash, good chunk of time, and tons of ass kissing to get into the "club" and find out the party is over.


Tue, 01/17/2012 - 00:18 | 2070138 Timmay
Timmay's picture

No worries, they will be first in line for the next scam, I mean career.

Tue, 01/17/2012 - 00:21 | 2070146 centerline
centerline's picture

It never ends!  LOL.

Tue, 01/17/2012 - 00:19 | 2070142 TheFourthStooge-ing
TheFourthStooge-ing's picture

All that money they spent on velvet knee pads and silk jizz bibs - wasted.


Tue, 01/17/2012 - 00:15 | 2070132 SillySalesmanQu...
SillySalesmanQuestion's picture

Let them eat CDS's!

Tue, 01/17/2012 - 00:32 | 2070162 sun tzu
sun tzu's picture

how about paying them with some of the worthless toxic debt "assets" they've been peddling.

Tue, 01/17/2012 - 00:48 | 2070184 RockyRacoon
RockyRacoon's picture

You mean they eat what they kill, eat their own cooking.   Fabulous metaphor! 

After all, they killed a lot of value, and cooked some books.

May they choke on either.

Tue, 01/17/2012 - 01:27 | 2070230 MsCreant
MsCreant's picture

Imagine if there was some event that created a "game on" kind of situation where everyone had to come clean about their books as fast as possible. I don't know the events, certain prosecution, threat of death by hanging, something. 

We'd all choke. It would also be great. 

I have a feeling this collapse will not be such a disaster for all.

I hope you are doing well. How is your property coming along? Planning your garden? 

Wed, 01/18/2012 - 13:24 | 2074766 RockyRacoon
RockyRacoon's picture

Hey, Missy.  I'm prepared for a medium sized "disaster".   My spring garden will be done, but not to the extent it has in the past.  The former years were for the practice, and for stashing some heirloom seeds.  I'm confident that I can do what is needed, when needed, and protect my "investment".   No more starting plants from seed again.   I'm focusing on making life lighter and more mobile.

Wed, 01/18/2012 - 14:20 | 2075058 MsCreant
MsCreant's picture

Understood. When the house was destroyed I was able to get to my bugout stuff quickly. It was a good thing and the fire drill told us we were not as prepared as we would have liked to be. We were quite cumbersome, but then again, we were trying to save as much as possible. My yard is a disaster but I hope to get it up and running this summer. Got to start where you are at. Davey Jones may have some ideas to share with me. Seems he is making his work 24/7/365.

Tue, 01/17/2012 - 00:15 | 2070134 bob_dabolina
bob_dabolina's picture

 "likely implying the yet to be re-expanded by $1.2 trillion debt ceiling will be breached just before the Obama election making it into the biggest talking point of the election cycle."

You made it move.

Tue, 01/17/2012 - 00:19 | 2070139 Seasmoke
Seasmoke's picture

oh boy a whole lot of other people are going to feel the squeeze even more, on this news.......Bloomberg, Cuomo, Christie, etc....

Tue, 01/17/2012 - 00:19 | 2070140 nasa
nasa's picture

short coke and high end hookers. long meth and crack whores.   

Tue, 01/17/2012 - 00:24 | 2070151 chump666
chump666's picture


Tue, 01/17/2012 - 00:19 | 2070144 b_thunder
b_thunder's picture

so those who gross less than  $250K are considered "poor" and won't get any of their $$ deferred?  

and thsoe w/out the fancy title - they are "low middle class"?

i thought that when USA enters the phase that frnce went through in 1792-94 and russia in 1917-18 some walls treeters wil be spared. i think i was wrong! 


Tue, 01/17/2012 - 00:33 | 2070152 Dr. Engali
Dr. Engali's picture

I wonder if those bankers that get their deferred comp in December get it before or after the Mayan calendar ends.

Tue, 01/17/2012 - 00:25 | 2070154 My cognitive di...
My cognitive dissonance's picture

Loved the footnotes.

In other words the teat is drying up.

Tue, 01/17/2012 - 00:53 | 2070156 williambanzai7
williambanzai7's picture

Cry me a river...


Time for a Reggie post on the rosey outlook for Manhattan real estate, commercial and residential.

Tue, 01/17/2012 - 00:32 | 2070165 kekekekekekeke
Tue, 01/17/2012 - 00:33 | 2070166 847328_3527
847328_3527's picture

that's the secretarial bonus cap, right?

Tue, 01/17/2012 - 00:49 | 2070187 slewie the pi-rat
Tue, 01/17/2012 - 00:34 | 2070168 LongSoupLine
LongSoupLine's picture

wow, bonuses plummet, downgrades of countries and the EFSF...boy look at those futures crash.

What?  They're climbing hard and 1300's about to be blasted you say?

Well...big fucking shock that is.

Tue, 01/17/2012 - 00:49 | 2070188 Dr. Engali
Dr. Engali's picture

The market is looking for a blow off top. Creeping up every day until the final short throws in the towel. After it's captured as much retail as it can on the long side as they can't resist the temptation. Then once that's happened this no volume market will plummet faster than Obummer's demigod approval ratings.

Tue, 01/17/2012 - 00:36 | 2070173 Clowns on Acid
Clowns on Acid's picture

Well this news should be bullish for Manhattan real estate....oh yeh and all those CDOs wiith the Manhattan mortgages in backing them....

Tue, 01/17/2012 - 00:40 | 2070178 junkyardjack
junkyardjack's picture

Manhattan real estate never goes down.  There are still the criminals trying to flee China that will gladly pay out their stolen funds to buy an apartment.

Tue, 01/17/2012 - 00:38 | 2070177 junkyardjack
junkyardjack's picture

The only appropriate reply that I could think of

Tue, 01/17/2012 - 00:43 | 2070182 non_anon
non_anon's picture

oh, how charitable of them

Tue, 01/17/2012 - 00:47 | 2070186 Teamtc321
Teamtc321's picture

Big Announcement Tomorrow Ron Paul 2012

Tue, 01/17/2012 - 00:58 | 2070194 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Drudgereport is having another poll.  Surprise, surprise, Paul is winning.

Tue, 01/17/2012 - 01:18 | 2070218 Real Estate Geek
Real Estate Geek's picture

WTF is up with Huntsman endorsing Romney instead of RP?  What a tool.

Tue, 01/17/2012 - 00:53 | 2070190 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Ron Paul is kicking ass and taking names.

Ron Paul Defends Cuts to Overseas Military:

Tue, 01/17/2012 - 01:24 | 2070225 Teamtc321
Teamtc321's picture

Thanks for the link LH, that is exactly what we all want imho. 

Tue, 01/17/2012 - 01:28 | 2070232 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Paul schooled that panel and made them look ignorant, especially the beard from the paper.

Tue, 01/17/2012 - 01:34 | 2070240 Teamtc321
Teamtc321's picture

He sure did. When a pebble is dropped it start's a ripple, that ripple has started a WAVE!!!


Ron Paul 2012

Tue, 01/17/2012 - 07:20 | 2070440 Ace Ventura
Ace Ventura's picture

Heck yeah he did. I still wince at his delivery though. If only the average boobus amerikanus could learn to listen for the substance of the man's words, instead of the style. Lord knows the audience was jammed packed full of bloodthirsty neocon chickenhawks.

One of my favorite moments was the 'what do you think the proper income tax rate should be?' question. All the other scheisters casually batting figures around between 15-25% like that was some sort of huge deal. Ron Paul = 0%. TOUCHDOWN.


Tue, 01/17/2012 - 00:54 | 2070192 SAME AS IT EVER WAS

O.T. but tonight ZH got another major endorsement, this time on gbtv.

Right on!

Tue, 01/17/2012 - 03:24 | 2070358 SAME AS IT EVER WAS

Update...liked Beck on Fox (for free! basicly). I listen to his radio show between 3 and 6 pm. when I am in my car. Today Beck tried to sell a "must see" (pay only) gbtv episode on the economy and it was total bullshit. The only reason I signed up was because of a free trial, and I now know why its FREE! Glad for the mention of ZH though!

Tue, 01/17/2012 - 01:38 | 2070212 Fozzy Slippers
Fozzy Slippers's picture

Don't ever let me come across one of these mother fuckers after the SHTF.

I'll spare your life, but I'll put you on a leaky ship bound for Liberia.

Tue, 01/17/2012 - 01:20 | 2070221 tongue.stan
tongue.stan's picture

one thing I really like about this site is that TD takes things to their logical conclusion

jpm cash bonus cap =====> obumba loses in nov

now if only logic ruled, we could trade off it

too bad fear and greed piss on logic like drunken mobsters after the beatdown

oh yeah, and fuck the bankers and their offspring

Tue, 01/17/2012 - 01:20 | 2070222 chump666
chump666's picture

Oil back over 100, China forced a EUR shortcover, futures up...good for 48hrs.  Oil should stay bid though. 


Tue, 01/17/2012 - 01:29 | 2070235 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

If supply/demand stays flat and the world contines to print we will see oil prices leak higher no matter what happens with stocks and bonds.

Tue, 01/17/2012 - 02:34 | 2070310 chump666
chump666's picture

I think so too.  Copper just went through the roof.  All on China stat fudging.  But it was coming, they wanted to create USD weakness because the Yuan has been dumped on mass last few mths.  Of course they are brain dead, they just get more inflation.  China is scary.

Central planning meltups.

Tue, 01/17/2012 - 01:20 | 2070223 San Diego Gold Bug
San Diego Gold Bug's picture

Anbody who has an account with this company is just another "Sheeple" waiting to get slaughtered.  Don't say I did not warn you................

Tue, 01/17/2012 - 01:25 | 2070226 squexx
squexx's picture

Jump, you bastards!!!!!!

Tue, 01/17/2012 - 02:05 | 2070277 Richard Head
Richard Head's picture

I believe the preferred signage is "Jump you fuckers!"

Tue, 01/17/2012 - 09:24 | 2070486 NuYawkFrankie
NuYawkFrankie's picture

Yes - I think it might be inspired by an old Dudley Moore skit.

Go to youtube and search for "Dudley Moore, Jump"

Tue, 01/17/2012 - 07:00 | 2070258 NuYawkFrankie
NuYawkFrankie's picture



Brother, can you spare a dime?  - Hobo circa 1932

Brother, can you spare a (preferably CASH) bonus? - Morgan Banker, Jan 16th 2012

Brings back haunting vignettes from The Grapes of Wrath. How soon before we see: tumbleweed blowing thru the deserted canyons of Lower Manhattan; a hookler-less Times Sq, ?  Crack-Kings having twofer sales? A $3,127.49 (not incl NYS & NYC Tax) bottle of Chateaux Botox going for a stale pizza crust? Clapped-out Ferraris, Lamborghinis, Model-Ts trundelling outta the Hamptons? The sorry spectacle slouches on....

Say it ain't so Ma!  - Tom Joad


Tue, 01/17/2012 - 02:29 | 2070304 chump666
chump666's picture

China's gone parabolic!  Rogue baby...

Industrial commodities all bought at once! It's corner trade from hell.

Nasty sh*t about to kick in...


Tue, 01/17/2012 - 02:44 | 2070319 dolph9
dolph9's picture

We are winning the war.  Stack 'em up, stack 'em high.

I'll see the bankers in hell.

Tue, 01/17/2012 - 07:04 | 2070432 NuYawkFrankie
NuYawkFrankie's picture

Wow! Lotta guys there with the last name Jersey!

Are they all related?

Tue, 01/17/2012 - 07:24 | 2070442 Ace Ventura
Ace Ventura's picture

LMAO +100

Tue, 01/17/2012 - 09:20 | 2070618 Absinthe Minded
Absinthe Minded's picture

Been here a week and already trying to sell us shit! Fuck off Calvin!

Tue, 01/17/2012 - 07:42 | 2070458 PMakoi
PMakoi's picture

"And since banker pay is responsible for a substantial portion of Federal tax revenue, look for Federal tax withholding data in the first few months of 2012 to get very ugly..."

The IRS has only to change income reporting rules for these bonuses by using the now time honored "mark to unicorn" appreciating the bonus value and tax the banksters accordingly.

Tue, 01/17/2012 - 08:21 | 2070484 Pemaquid
Pemaquid's picture

Possibly the poor bank revenue will mean reduced campaign contributions? Not!

Tue, 01/17/2012 - 09:39 | 2070578 chunga
chunga's picture

What about the GSE are they doing in the bonus department?

Here's a brief half-assed history on these bastards:

FRANKLIN RAINES [D] – FNMA CEO (1999 – 2004) Raines accepted “early retirement” from his CEO position while the SEC pretended to investigate accounting irregularities. Fannie’s own OHFHEO also accused him of abetting widespread accounting errors, including the shifting of losses, so he and his fellow execs could “earn” large bonuses. The WSJ reported back in 2008 that Raines was one of several cronies that received below market rates for mortgages from Countrywide. Raines alone receive loans for over $3 million while CEO of FNMA. Raines’ compensation for his “work” at FNMA - $90 million.


DANIEL MUDD [R] – FNMA CEO (2005 – 2008) Before becoming CEO of FNMA, Mudd worked at the Office of the Secretary of Defense, was an advisor to Asia-Pacific Economic Corp., “served” on the board of the Council of Foreign Relations, “consulted” at the World Bank, and held many positions at GE Capital including president and CEO. Mudd was dismissed as CEO of FNMA when FHFA became conservator in 2008. In 2011 Mudd and other GSE execs were charged by SEC with securities fraud. After his career at FNMA Mudd became CEO of a NYC hedge fund named “Fortress”. Fortress invested in purchasing tax liens on delinquent property taxes from local governments under many benign corporate names such as “Pleasant Valley Capital” and “Travis Farm Investments”. Cozy. Mudd’s compensation for his “work” at FNMA - $80 million.


NEEL KASHKARI [R] – FNMA CEO (Tenure is murky) Kaskari was a former investment banker for Goldman Sachs, was tapped by Hank “The Shank” Paulson to lend his skills over at TARP HQ, and now rather ironically, continues God’s work as a Managing Director at PIMCO. Kaskari’s compensation for his “work” at FNMA is also murky; I’ll just assume it was too much.


HERB ALLISON [D] – FNMA CEO (2008 – 2009) The esteemed Mr. Allison was quickly whisked off to oversee the wildly successful TARP program. I didn’t find much on his compensation during his brief stint as FNMA CEO. Allison served in various positions at Merrill Lynch and became a member of the board in 1997. He was a director of the NYSE from 2003 – 2005.


MICHAEL WILLIAMS [?] – FNMA CEO (2009 – Jan 1, 2012) Mr. Williams is a 20 year veteran at FNMA. While “serving” as FNMA CEO, Williams managed to scrape by on less than $6 million in 2011 alone. This could and should be considered a hardship, given the complexities involved in purloining ~ $60 billion of Fed bailout money.


Fannie’s major dance partner – Freddie – has performed equally abysmally.

Charles (my friends call me “Ed”) Haldeman has announced his retirement plans but intends to be a good sport and stay on with insolvent FHLMC until another crony can be found to fill his wing-tips.

That might take a while. “Serving” as CEO of the ultimate backstops for the lion’s share of the MBS Ponzi is very stressful.

We’ll have to accept former Freddie exec David Kellermann’s testimony posthumously. Mr. Kellermann was found hanging by the neck in the basement of his posh Vienna, VA home in the affluent suburb of Washington. D.C. way back in April of 2009. It is presumed he had no help and local police have stated there was no evidence of foul play.

Last week, a wisp of political fresh air was carried in the breeze.

For Immediate Release FROM Senator Bethany Moura [R-RI] Jan. 10, 2012

"Freshman RI Senator levels serious allegations at Fannie Mae & Freddie Mac - Jan. 10, 2012"

This press release came on the heels of this fax to US Senator Jack Reed...



...and before that...

R.I. Senator Moura Complaint To The Department of Treasury RE: Wells Fargo

"Please be advised that I will be filing a complaint with the Department of the Treasury, against Wells Fargo..."

"I have access to piles of detailed notes, emails, faxes and requests to explain in great detail the poor practices of Wells Fargo."

Yesterday, the firebrand freshman was on the Dan Yorke show for an hour. It is archived here.

The show's host kept a tight rein on her but she vows not to stop. Twitter users can show support @Senator_B_Moura

Disclosure: I do not reside in RI but if I did I'd be volunteering in her campaign...for US Senate.

Do NOT follow this link or you will be banned from the site!