Preemptive Coverup on Wall Street
The Wall Street Journal reported today that securities firms have a claw back clause that allows them to call back bonuses from people whose screw ups turn out to cost the company big bucks. ok. But Morgan Stanley’s contract includes “reputational harm”: which sounds like it would include people who tell tales out of school:
Grounds for invoking the provision include “the need for a restatement of results, a significant financial loss or other reputational harm to the Firm or one of its businesses,” the memo said. Morgan Stanley’s rule applies to 2008 bonuses and cash payouts vesting over a three-year period. The roughly 7,000 employees covered by the policy range from top brass to midlevel workers.
Patterson, Scott. 2008. “Securities Firms Claw Back at Failed Bets.” Wall Street Journal (10 December). http://online.wsj.com/article/SB122887461425193661.html?mod=todays_us_money_and_investing