Retention deal same for Morgan Stanley, Smith Barney reps

Anxious advisers at Morgan Stanley and Smith Barney have received some comforting words from James Gorman, the co-president who will oversee the two brokerage firms when they form a joint venture later this year.

Anxious advisers at Morgan Stanley and Smith Barney have received some comforting words from James Gorman, the co-president who will oversee the two brokerage firms when they form a joint venture later this year: “We said we would be providing a retention award, and we will be providing one,” Mr. Gorman said in a conference call with reps this week.
Mr. Gorman said that he has received a number of e-mails from reps about retention awards since plans for the joint venture were unveiled Jan. 13.
At the time, Mr. Gorman had stated that reps would have the specifics of their retention payments within 30 days. Since then, however, no details have been given to reps.
The final details of these payments will now be outlined by the end of February, Mr. Gorman told reps during this week’s call, a snippet of which made its way onto the Huffington Post website.
Some of the components of the retention awards, however, were disclosed on the call. For one, the payments will be identical for both Smith Barney and Morgan Stanley advisers. “What’s fair and equitable is to treat everybody on the same basis,” Mr. Gorman said.
Also, he noted that the retention payments will be based on an adviser’s production for 2008, not 2009, as some reps had feared. “I think I can hear you clapping from here in New York,” Mr. Gorman said. “You should be clapping because frankly that is a very generous and thoughtful decision that we have made.
“We spent a lot of time kicking this around. We could easily have done it from the point of closing, which is obviously going to be somewhere in the latter half of this year or around the middle of the year. But we just decided… that it was right thing to do, to give you that certainty that it would be based off ’08. [2009] is a very difficult year and we understand that it clearly would have been cheaper to have done it off ’09, but we think it’s the right thing to do, and we’ve made that decision.
“So that degree of anxiety, which many, many of you have e-mailed me about,” Mr. Gorman continued, “is now off the table.” Morgan Stanley and Smith Barney both of New York have reportedly set aside $2 billion to $3 billion for retention payments. A spokeswoman for Morgan Stanley was not immediately available for comment.