Morgan Stanley CEO says no Wall Street brain drain by Stephen Gandel @FortuneMagazine March 16, 2012, 3:45 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons James Gorman FORTUNE –Apparently, getting a bonus check for $125,000 isn’t as disheartening as it may seem to some on Wall Street. Morgan Stanley CEO James Gorman, speaking at a Fortune breakfast series, said his firm has lost only two high-level employees since capping year-end cash bonuses for 2011 at $125,000. The news of the low year-end pay, at least by Wall Street standards, has sparked griping that being an investment banker is not worth it anymore. Some have said it was a big ego blow. A New York Magazine cover story on the topic had a picture of a person in a suit, presumably a banker, holding his crotch. Last month, though, Gorman said employees who were unhappy with their pay “should just leave.” Few did. Gorman told Fortune managing editor Andy Serwer that the idea that Occupy Wall Street, falling pay checks and allegations that clients are treated like “muppets” is hurting recruiting and retention is “ridiculous.” “There’s one guy who wanted to go to Wall Street but now had some kind of moral epiphany and won’t, who cares?” said Gorman. He said he recently spoke at a Wharton business school and that there were two overflow rooms of students. He said many of the students wore suits and came up to him with business cards. “The number of friends who call me to get jobs for their kids hasn’t stopped,” said Gorman. MORE: Why Greg Smith is leaving Goldman now Morgan recently handed out offers to soon-to-graduate undergraduates and MBAs. Gorman said the acceptance rate has been somewhere between 70% and 84%. He says most of the people who haven’t joined Morgan have gone to one of his firm’s two main competitors. “They’re not going anywhere else,” says Gorman. What’s more, there hasn’t been any mass exodus at the firm, either. Gorman said Morgan Stanley MS has lost only two managing directors “that he regretted,” out of 1800, since paying out bonuses. One was in Asia and left to go to a hedge fund. Gorman didn’t comment on who the other was. Outside of top management, managing director is typically one of the highest level positions at an investment bank. Gorman said he thought the recent New York Times op-ed by former Goldman Sachs GS employee Greg Smith was unfair. He said printing an op-ed by one disgruntled employee was not “fair and balanced” and that it seemed to him that Goldman is still a place that is respected by its clients. He told employees not to circulate the article to clients in order to win business. MORE: Where the stress tests failed Like Goldman, he says Morgan regularly deals on transactions where it has conflicts of interest. “It probably happened sometime in the last week somewhere in the world,” said Gorman. He said there are no absolute rules on when the firm should back out of a transaction because of conflicts. “That’s why we have conflict committees,” said Gorman. To be sure, few are crying for investment bankers. Most employees at Morgan got paid well over $125,000 last year. On top of the cash bonus, Morgan employees receive a set salary, which has been rising in last few years, and stock grants, which for top bankers can be hundreds of thousands of dollars, if not millions. Gorman said he thinks the U.S. economy is clearly strengthening and that bank stocks will outperform the Standard & Poors 500 in the next few years. “We are in much better shape than our stock price suggests,” said Gorman.