Morgan Stanley’s Expanded Bonus Deferrals May Haunt Shareholders

Morgan Stanley’s new deferred bonus plan will reward patience, at least for its top employees. For shareholders of the investment bank, the costs may linger for at least three years.

While Morgan Stanley improved profit by cutting 2011 pay packages for senior investment bankers and traders, the bottom line got another boost from deferring an average of 75 percent of those payouts, up from 40 percent two years earlier, people with knowledge of the matter said. Those costs may instead be borne this year or beyond.