OK, I figured I would everyone a chance at a little Sunday morning outrage. The geniuses that brought us the bonuses for bankers from TARP money are about to go to round 2.
Here is the link to a Bloomberg story
I figure the title is enough to get most of the people here a little bit fired up:
Morgan Stanley to Offer Brokers $3 Billion Retention
Yep, as the financial market collapses and layoffs hit Wall Street, the thought is we have to shovel money out to keep people. My bet is anyone who can hang onto their job for dear life in that industry has a death grip on it.
More below:
The money quote may be:
Top producers may be eligible for 105 percent of their annual production, the person said, speaking on condition of anonymity because the plan isn’t public.
Morgan Stanley is paying the bonuses to limit departures of brokers who might be poached by other firms such as UBS AG and Credit Suisse Group AG as U.S. banks face compensation restrictions after receiving government rescue funds. Citigroup and Morgan Stanley, both based in New York, have gotten a combined $62 billion in government money since October.
And so it starts - because we are asking to limit compensation to employees of companies that are using governmnt funds to stay afloat they have to use more of that bailout money to make sure the employees don't leave. The plan states the money will come from operating revenues and that no TARP funds will be used but some of the details call that into question.
Now, the good part is that this retention bonus supposedly pays out over 9 years. But the numbers get real big.
The joint venture will pay Morgan Stanley and Smith Barney brokers who produce at least $1.75 million in revenue as much as 105 percent of that amount, including 75 percent in the first payment and a guaranteed 30 percent later. Brokers who make $1 million to $1.74 million are entitled to 75 percent plus an additional 25 percent if they meet certain growth targets over three years.
BTW, the number of brokers covered - 6,500. The program appears to have no top limit on it.
Simple question - if you are paying 105% of operating revenue how can the funds come from operating revenue? This may the same math that got us here.
Just thought I would let everyone have a nice peek at the other half's belt tightening plan.