Why Big Banks Are Putting Caps on Director Salaries

Over the past two years, a growing number of U.S. banks has capped their directors’ earnings, but the ceilings are so high that they primarily serve to fend off potential shareholder litigation rather than control the pace of pay increases. Most of the caps are typically 2-3 times what directors now get paid, according to data and filings reviewed by Reuters. For instance, Morgan Stanley’s quarterly financial statement last month noted a new $750,000 limit on annual compensation for independent directors. That is more than double the $350,000 median the bank now pays its directors. Morgan Stanley’s board has permission to “alter, amend, or modify the plan at any time,” according to the bank’s filing.

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