Tuesday, May 26, 2009

Unintended Consequences

Maybe not. U.S. taxpayers are going to get the Morgan Stanley TARP money back with interest so Morgan is a nice little test tube in which we can look at how the limits on executive pay are working out. From the WSJ:

"Morgan Stanley Boosts Salaries as Its Bonuses Are Limited

Under the changes, managing directors will see about 25% to 30% of their overall compensation come from their base salary, up from about 15% to 20%, said a person familiar with the matter. A managing director making $250,000 in base salary could now see that salary rise to $400,000."

I don't believe that big bonuses were the biggest driver of the risks these folks took. That's like saying Michael Phelps won all those gold medals for the endorsement deals. This is just another example of a group of very smart individuals moving smoothly around the rules.

Getting as low as 15% of your total comp in base salary is a little ridiculous anyway.

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