Will Activist Investor Keep Morgan Stanley Down?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Everyone loves big investors and the money they bring to the table -- until they try to start telling you what to do. In Morgan Stanley's (NYSE: MS  ) case, one outsize investor in particular is trying to have an outsize say on pay, with potentially detrimental effects to the struggling Wall Street perennial.

I'm just saying
The Wall Street Journal is reporting that Daniel Loeb, the infamously activist investor who runs the hedge-fund Third Point LLC, is questioning whether or not the level of executive pay at Morgan Stanley is "justified given the New York company's size and relative simplicity compared with larger banks."

Loeb himself feels justified in bringing such a topic to the table, because Third Point has just taken a substantial stake in the firm. Loeb specifically pointed out directors' compensation as an issue, which is higher than that for the boards of either JPMorgan Chase or Citigroup

Batter up, Mr. Loeb
According to the Journal, Morgan Stanley CEO James Gorman, whose pay is also under scrutiny, "reached out to Mr. Loeb and welcomed him as a new investor."  

Well, what else are you supposed to say when a big-shot investor buys a big-shot stake in the company you run? Maybe, more importantly, what does Loeb's thinking mean for the firm's future potential to attract and keep the kind of talent that keeps a Wall Street bank on top?

Goldman Sachs (NYSE: GS  ) is, by many measures, one of the most successful banks on Wall Street; it's also one of the highest paying.  Loeb has said that he bought into Morgan Stanley because he believes the bank "is in the early innings of a turnaround." But the best teams typically have the best-paid talent. Just look at the New York Yankees.

The Foolish upshot? If Loeb wants Morgan Stanley to not just stay in the game, but to win it, he'd better be ready to pay for the players who can do it for him.

In a mood for recovering Wall Street banks? With a soaring fourth-quarter earnings report and the London Whale far behind it, JPMorgan Chase is the toast of the town. Take a minute and check out a new Motley Fool report on the House That Dimon Built. You'll learn where the key opportunities for the superbank lie, where its core growth will come from, and the potential business risks. You'll also get an analysis of its leadership team. For instant access click here now.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2203017, ~/Articles/ArticleHandler.aspx, 9/25/2016 12:20:04 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:01 PM
GS $165.13 Down -2.89 -1.72%
Goldman Sachs CAPS Rating: ***
MS $31.91 Down -0.33 -1.02%
Morgan Stanley CAPS Rating: ***