HEARD ON THE STREET
NOVEMBER 18, 2008
For Wall Street, Less Is More
By THOROLD BARKER
Keeping the ratio of compensation to net revenues well below the usual target of about 50% is one vital element.
More important than politics, however, Wall Street firms need to show their investors they will share the pain in tough times. Morgan Stanley failed last year. It raised the overall compensation ratio to 59%, after taking a big hit to net revenues from a bad mortgage-related trade. Goldman took its ratio down to 44% because it had a very strong year.
The WSJ also provides a little graph that covers the last few years:
It would be GREAT to have some legal means to take back some of this pay to help get us out of the Big ShitPile.
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