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When putting together a big merger, it's not easy keeping employees on board. Often, the strategy is to extend retention bonuses. If not, there could be a significant revenue drain.
Take a look at Morgan Stanley's (NYSE: MS) joint venture with Citigroup (NYSE: C) to form a massive brokerage organization. To keep key brokers on board, Morgan is willing to pay as much as $3 billion in retention bonuses.
Yes, in today's harsh environment – where Wall Street is considered a pariah (if not worse) – this seems out-of-whack. After all, Morgan Stanley was the recipient of lush federal bailout funds, although the bonuses will not come out of TARP funds, the company says.
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