Morgan Stanley confirms that pay wasn't great, but there are caveats
Morgan Stanley published its Q4 and full year results for 2024 today. The headline figures aren't bad, but if you ask its bankers, bonuses haven't been great. In reality, it’s complicated.
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As the charts below show, Morgan Stanley did well. Equities sales and trading professionals impressed in particular, with a 51% increase in revenue in Q4 of 2024 compared to Q4 of 2023. Year on year, revenues in the institutional securities business were up 22% and profits were up by a whopping 93%. And yet, spending on compensation in the business was up only 3.6%.
Obviously, there’s a disconnect there. But it's not as simple as Morgan Stanley underpaying. The bank noted that it's increased compensation to reflect higher revenues, but said there was a significant DCP (Deferred Cash-based Compensation) effect at play that wasn’t involved last year.
Morgan Stanley also clarified that institutional securities compensation this year was offset by “lower severance expenses” – likely related to the 3,000 heads that were cut in early 2023. There haven't been similar cuts this year.
Anecdotally, Morgan Stanley's bonuses seem to have increased by less than elsewhere. JPMorgan and Goldman Sachs are both said to have increased their bonus pools by around 15%. Bank of America isn’t too far behind, with Reuters reporting a 10% increase. All four banks had a strong 2024.
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