Morgan Stanley CEO James Gorman has strong words for employees who were bellyaching about pay cuts at the bank. Last year, Morgan Stanley capped cash bonuses at $125,000 for employees, which Reuters describes as "an unusually low amount for a workforce accustomed to multi-million dollar payday." Asked today how he responds to complaints from his underlings, Gorman said he tells workers:
You’re naive, read the newspaper, No. 1. No. 2, if you put your compensation in a one-year context to define your overall level of happiness, you have a problem which is much bigger than the job. And No. 3, if you’re really unhappy, just leave. I mean, life’s too short... The world has changed and the banking industry has gone through a fundamental change, and we have to readjust. When we come out of this and we start re-performing, obviously compensation will reflect that. Until then, we have to respect the fact that shareholders have to get paid, too.
In addition to the bonus cap, Gorman is reducing pay for senior investment bankers and traders by an average of 20 percent to 30 percent. These are the kind of pay cuts that some bailed-out banks refused to foist on employees, arguing that in order to stay competitive and retain talent, bonuses had to stay high. (Morgan Stanley got $10 million in TARP money and repaid it in 2009.) But lo and behold, Gorman says the pay cuts at Morgan Stanley have caused "very little turnover."
And he's made sacrifices too, you know; sources tell Reuters that Gorman was awarded a measly $10.5 million bonus for 2011, down 25 percent from the previous year. Yet, despite his brave sacrifice, Morgan Stanley is still laying off 1,600 employees.
