Bankers at Morgan Stanley who stuck around after an infamous 2012 interview with Chief Executive James Gorman are reaping the rewards. The bank is having a banner year, and it’s back to paying its workers handsomely following a successful remodeling of its franchise.
Gorman on Thursday praised his management team for the turnaround, noting on Bloomberg TV that the bank is paying its staff “competitively” with profitability “continuously improving.”
Concentrating more on wealth management, and with smaller, more efficient investment banking and trading units, Morgan Stanley reported third quarter earnings that almost doubled 2013 numbers. The company set aside $12.7 billion in compensation expenses for the first three quarters of the year, up 4% compared to the same period in 2013. From all indications, the fourth quarter is going pretty well too.
“We have a tremendous management team,” Gorman told Bloomberg TV. “I think they’ve been killing themselves for five years turning this thing around and it’s worked. And, God bless them, they deserve all that comes from that success.”
Always one to tell it how it is, Gorman ruffled some feathers last time he made headlines surrounding compensation. In 2012, with the firm struggling and outside pressure mounting around incentivized pay, Gorman was blunt, to say the least, around grumblings over pay cuts.
“I say, you’re naive. Read the newspaper, number one,” he told Bloomberg at the time. “Number two, if you put your compensation in a one-year context to define your overall level of happiness, you’ve got a problem which is much bigger than the job. And number three, if you are really unhappy, just leave. I mean, life’s too short.”
Not often do CEOs of major corporations challenge their workforce like that, especially in banking where chief executives often go out of their way to keep pay competitive for fear of losing staff. Just look at what Barclays did last year, increasing bonuses despite losing money. Chief Executive Antony Jenkins said he feared a “death spiral” of defections if he didn’t.
Give Gorman credit. He told employees if they didn’t like it, they could take a hike. Those who stuck around are now being rewarded.
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