FACTBOX-Morgan Stanley set to pay employees less than Lehman

NEW YORK, June 19 (Reuters) - Morgan Stanley has so far set
aside less money to pay employees than Lehman Brothers has,
even as the average Morgan Stanley employee has generated more
revenue than the average Lehman employee, according to second-
quarter results released this week.

Goldman Sachs (GS.N) employees, meanwhile, are once again
on track to be the best paid among the major Wall Street
investment banks, though all three banks are on track to cut
average compensation from last year.

Morgan Stanley has set aside $151,563 of compensation per
employee for the first two quarters, compared with Lehman's
$159,074. But Morgan Stanley employees each generated $319,724
of revenue on average, compared with $108,404 at Lehman.

Lehman is paying workers more than they generate in
revenue, which is clearly an unsustainable trend. Big
write-downs during the second quarter cut into revenue to the
tune of $4.9 billion.

When Lehman's write-downs slow, revenue should rise. But
the fact that Lehman's shares are trading below their book
value, or their accounting value, signals that investors expect
more write-downs at the bank.

Lehman has cut staff this year, which boosts compensation
expense in the quarters in which staff are laid off, and
reduces expense later in the year. Lehman incurred $170 million
of severance expenses in the first half of its fiscal year.

Goldman, meanwhile, has set aside $270,614 per employee,
and its employees each generated an average of $563,804 of
revenue for the first two quarters.

The other major U.S. investment bank, Merrill Lynch & Co.
MER.N reports second-quarter earnings next month.

Below is a table comparing this year's compensation with
last year's, for the first two quarters of the fiscal year.
Values are rounded to the nearest dollar.
Lehman Brothers 2008 2007
Net revenue, YTD $2.839 bln $10.559 bln
Compensation
and benefits
expense, YTD $4.166 bln $5.206 bln
Number of
employees,
end of Q2 26,189 28,323
Revenue per employee, YTD $108,404 $372,807
Compensation
and benefits
expense per employee, YTD $159,074 $183,808
Goldman Sachs 2008 2007
Net revenue, YTD $17.757 bln $22.912 bln
Compensation
and benefits
expense, YTD $8.523 bln $10.998 bln
Number of
employees,
end of Q2 31,495 28,012
Revenue per employee, YTD $563,804 $817,935
Compensation
and benefits
expense per employee, YTD $270,614 $392,617
Morgan Stanley 2008 2007
Net revenue, YTD $14.832 bln $20.518 bln
Compensation
and benefits
expense, YTD $7.031 bln $9.769 bln
Number of
employees,
end of Q2 46,390 45,845
Revenue per employee, YTD $319,724 $447,552
Compensation
and benefits
expense per employee, YTD $151,563 $213,088
(Reporting by Dan Wilchins, editing by Maureen Bavdek)