Morgan Stanley ups pay as profits rise

Morgan Stanley spent $16bn on pay last year, up from $14.4bn in 2009, but increased the amount of deferred bonuses and cut back on the portion paid in cash.

The American investment bank said that, on average, it had deferred 60 per cent of year-end compensation in 2010, up from 40 per cent in the 2009. For senior executives who were members of its operating committee, Morgan Stanley deferred an average of more than 80 per cent of year-end pay, up form 75 per cent in 2009.

James Gorman, the chief executive, said the bank was not compensating employees at levels that introduced "significant risk".

The figures were disclosed in the bank's annual results, which showed that fourth-quarter net revenues climbed to $7.8bn from $6.8bn a year ago. Fourth-quarter shareholder profits stood at $600m, up from £376m the previous year. Earnings rose to 41 cents per share from 29 cents. The bank's wealth management arm, which includes a 51 per cent stake in the brokerage Morgan Stanley Smith Barney, added $14bn in net new client assets over the quarter. Its net income was up nearly 70 per cent at $272m.

David Carter, the chief investment officer at New York-based Lenox Advisors, said the results were a "mixed bag".

"There's some good news, but trading revenue is down... It seems like Morgan Stanley has made good internal changes, but, to my mind, earnings were a little light," he explained.

"The whole [of Wall] Street seems to be having a problem with trading. Morgan Stanley did, Citigroup did, and I think JP Morgan did as well. Firms are seeing slowdown in trading."