The Guardian reports: The chief executive of the US investment bank Morgan Stanley has said Wall Street pay is still “way too high” and remuneration and jobs will have to be sacrificed to boost shareholder returns.
The comments by James Gorman, who took over the running of the bank in 2010, set him apart from longer standing peers who have always defended high pay as necessary for retaining key staff.
But Gorman told the Financial Times: “Compensation is way too high. As a shareholder I’m sort of sympathetic to the shareholder view that the industry is still overpaid.”
Morgan Stanley is cutting 4,000 jobs, 7% of its workforce, by the end of this year and the bank said it would consider more redundancies next year and pay cuts for the remaining staff.
Gorman said that in the past bankers’ pay had always increased with revenues, but never came down when revenues came down, as banks were so afraid of losing staff. “That’s a classic Wall Street case of ‘heads I win; tails you lose’. The current Wall Street management is a little tougher-minded about that and shareholders are certainly tougher-minded.”
His comments follow announcements from a string of European banks ceding to pressure from shareholders over pay. Deutsche Bank last month said it was cutting bonuses and would spend less of its revenue on pay. UBS said it was considering capping bonuses and linking them to the bank’s profitability. The Barclays chief executive, Antony Jenkins, said bonuses would be linked to the way staff did business, not just the revenues they generated.