![The headquarters of Morgan Stanley in New York.](https://webarchive.library.unt.edu/dentonfracking/20141206005743im_/http://graphics8.nytimes.com/images/2014/07/25/business/dbpix-morgan-stanley1/dbpix-morgan-stanley1-blog480.jpg)
Morgan Stanley employees will be getting more of their cash bonuses up front this year, in the latest sign of the Wall Street firm’s recovery from the financial crisis.
The bank will defer only about 50 percent of its cash bonuses for employees this year, down from the 80 percent that it deferred last year, according to a filing on Friday.
Morgan Stanley’s decision, in recent years, to hold back a high proportion of employee pay, generally for three years, helped the bank deal with its fragile financial condition, essentially putting off its bills for later. Morgan Stanley was one of the most aggressive banks in terms of withholding pay.
Deferring pay has broadly been lauded as a healthy way to bolster accountability at Wall Street banks. When bankers are not paid up front, their employers have more leverage to punish them for any bad behavior and unnecessarily risky bets.
James Gorman, the chief executive of Morgan Stanley, had previously said that the firm’s large amount of deferred pay was something that he hoped other firms would follow.
“On financial discipline, we’ve spent a lot of time thinking through, and I think leading parts of our industry in compensation, in terms of structure, the clawback procedures, various other things,” Mr. Gorman said in a June 2012 presentation.
Critics of Morgan Stanley’s strategy, however, said that the large amounts of deferred pay could make it hard for the firm to compete for employees against other banks that offered more pay up front.
The strategy was also viewed as risky because it created a large future bill for Morgan Stanley, which shareholders did not know if the company would be able to afford to pay.
On Friday, in an email to employees, Mr, Gorman said that the current move is a positive one for Morgan Stanley that will put the firm on more stable footing and help it compete for the best employees: “The period of fragility Morgan Stanley faced from 2008 to 2012 has, thankfully, ended. These changes are another important indicator of the stability of the firm and our focus on long-term success.”
In its most recent earnings report, Morgan Stanley delivered significantly better results than it had a year earlier, and beat analyst expectations. The success has been viewed as a vindication of Mr. Gorman’s efforts to turn the bank into a less risky institution focused primarily on clients.