December 9, 2010

Wall St. Bonuses: Did Outrage Win?

J. W. Verret

Senior Affiliated Scholar

"We have to ask ourselves, why now? Why has Morgan Stanley decided to shift strategy mid-stream like this? The answer is the passage of landmark financial services legislation this summer that will give shareholders a lot of new power to have say on pay and to put forward nominees onto boards. Who's going to use that--union pension funds and state pension funds run by elected officials," said Verret. "We're seeing boards of directors, including Morgan Stanley, that are making a lot of decisions based on the possibility of that political pressure, and I think that is not necessarily the best thing for the health of these companies and these banks."