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JULY 26, 2004
A Bad Deal For Women Morgan Stanley's modest settlement won't do much to curb sex discrimination Wall Street chiefs supposedly earn big bucks because they can rack up big numbers. But they deliver some pathetically small ones, too. Like zero. That's the number of women on the management committees of Bear Stearns Cos. (BSC ) and Lehman Brothers (LEH ) Inc. Or one, which is how many women have made it to the top rung of Morgan Stanley (MWD ). And then there's 14 -- the percentage of women who are managing directors at large firms, according to the industry's lobby group. On July 12, a promising number seemed to pop up: $54 million. That's how much Morgan Stanley agreed to pay to settle charges that it denied promotions and pay increases to hundreds of women. It's the biggest such award obtained by the Equal Employment Opportunity Commission since 1997, when it won $81 million from Publix Super Markets Inc. of Lakeland, Fla. Morgan Stanley will have an outsider monitoring its progress in promoting diversity for three years. And lead plaintiff Allison K. Schieffelin, who alleged the firm fired her for complaining about sex discrimination, pockets $12 million to resolve all of her claims. Good deal? Not really. For Wall Street, the amount is chump change. Worse, critics say, Morgan Stanley's alleged misdeeds now won't be aired in a public trial, leaving many troubling questions raised by the case unanswered. The firm denies that it has ever discriminated against women, though it is adopting a bunch of programs to treat them better. "We are proud of our commitment to diversity," Chairman and CEO Philip J. Purcell said in a statement. Wall Street still needs a big push if women are to get a fair shake. Sure, there has been progress. But despite firms' efforts to improve women's career prospects, there's a long way to go. "Some women don't stay around because they say, 'I'm never going to make it to the top,"' says Muriel F. Siebert, chairman of Muriel Siebert & Co. (SIEB ) and the first woman to have her own seat on the New York Stock Exchange. It is difficult for women to get attention unless they can inflict damage on Wall Street firms where it counts: on the bottom line. The Morgan Stanley settlement is a mere rounding error in its $1 billion quarterly earnings. "It's virtually impossible to get [a settlement] that would hurt these companies," says Chicago lawyer Mary Stowell of Stowell & Friedman Ltd. Her firm filed a landmark 1996 sex-discrimination class action against Smith Barney (C ) that resulted, two years later, in a wide-ranging settlement with the firm, now merged into Citigroup (C ). There's a chance that many women involved in the case could end up with precious little. After Schieffelin's $12 million payday and $2 million to fund new diversity programs, there's just $40 million left for 340 potential claimants -- about $100,000 each. The EEOC estimates that only one-third of them will actually file, which would leave each person $400,000. Still, for many bankers, "that's less than a year's pay," says veteran Wall Street compensation consultant Alan Johnson of Johnson Associates. And for many, that's not enough for them to risk ruining their careers by being branded as troublemakers. To make it on Wall Street, what women really need is commitment from the top. And if CEOs don't show it, directors need to step in. Boards can -- and should -- make sure the paychecks of the Street's chiefs reflect any failure to treat women equally. Even without going to trial, the Morgan Stanley case raised enough awkward questions for directors to sit up and take notice. "I hope that when the boards of major firms go into their next meeting, they will ask to see how well women are doing," says Siebert. "Numbers speak louder than words." They sure do. And right now, they're screaming for improvement.  By Emily Thornton Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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