Morgan Stanley's 2024 bonuses might be complicated

In Morgan Stanley's Q2 results today, the bank revealed that compensation expenses in its institutional securities group increased by $139m year-on-year for the last quarter. It blamed"higher expenses related to deferred compensation" for this increase, a curious claim given the bank's previous reporting.

Get Morning Coffee ☕ in your inbox. Sign up here.

In Morgan Stanley's 10-K filing with the SEC for 2024, the bank revealed that it had $6.9bn in projected future compensation obligations, and said that 18% of those expenses were related to the institutional securities business, where its bankers and traders live.

However, in that same 10-K, Morgan Stanley said that only $623m of its deferred compensation would be recognized in 2025. If we assume that 18% of those deferrals are again related to the institutional securities business, then Morgan Stanley will paying its bankers and traders $112m in deferred compensation this year, or $28m a quarter.  

Why did compensation spending increase by $139m then? The implication is that $111m of the increase in Q2 compensation expenses in the institutional securities business might have been driven by something other than deferred bonuses from last year.

What could that be? Maybe higher bonuses for this year? Equities sales and trading revenues at Morgan Stanley were up 34% year-on-year for the first half of 2025, and their second quarter revenues were the highest on record. Debt capital markets, meanwhile, were down 1.8% for that same period. M&A revenues were up a modest 1.7%.

Severance may also be pushing up compensation spending. In June, Morgan Stanley begun a reduction in force (RiF) in which 2,000 jobs are set to be cut. Those cuts include 230 people in New York, although there are indications that these cuts are back-office focused. 

Have a confidential story, tip, or comment you’d like to share? Contact: Telegram: @AlexMcMurray, Signal: @AlexMcMurrayEFC.88 Click here to fill in our anonymous form, or email editortips@efinancialcareers.com.

Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libellous (in which case it won’t.)