Morgan Stanley’s reported move to defer 100% of 2012 bonuses for high-earning employees is the crescendo of a trend of big banks deferring more pay in recent years. It’s the second straight year of big deferrals at Morgan Stanley, which a year ago held back 75% of bonuses for traders, investment bankers, and other high earners after having been at the 40% level the previous two years…

Another, perhaps equal motivation is that shareholders, regulators, and commentators all like it when banks defer bonuses, says Alan Johnson of Johnson Associates, a compensation consulting firm specializing in the financial-services sector…

Morgan Stanley employees are reportedly unhappy with the 100% deferral. Adept communication is the key to avoiding such a reaction, says Johnson. Banks deferring a large portion of bonus pay, with much of the compensation to come in the form of stock, should point out to employees that the deferral actually gives them a chance to make a lot more money, he counsels.

CFO / January 16, 2013

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