Reuters reports that Morgan Stanley is deferring bonuses for all employees who make more than $350,000 annually and whose bonuses are at least $50,000, one of the sources said. The source said the deferral does not apply to retail brokers.
The long deferral in cash payouts for high earners is unusual, but more banks will likely follow suit, said Joe Sorrentino, managing director of Steven Hall & Partners, a New York-based executive compensation firm.
Employees who make less than $350,000 annually and whose bonuses total less than $50,000 will receive their full cash bonuses in February, one of the sources said.
The Wall Street Journal reports that as word of the new bonus plan swirled through the company on Tuesday, some employees face postponing purchases, dipping into savings or tempering their lifestyles.
The bonus plan's immediate impact will be softened somewhat because Morgan Stanley is due to pay deferred compensation earned in 2011 and earlier. Last year, Morgan Stanley capped immediate cash bonuses at $125,000 for its best-paid employees and deferred the rest.
Bankers Get IOUs Instead of Bonus Cash (subscriber content)