In a regulatory filing Friday, Morgan Stanley said Mr. Gorman’s total compensation for 2011, including stock and deferred cash, would drop by 25 percent, to $10.5 million from $14 million in 2010.

Wall Street firms typically aim for a compensation ratio of less than 50 percent of revenue, but especially in weak years, they’ve often gone higher. One of the maddening aspects of Wall Street pay, at least for those outside the industry, is that in good times bankers and traders have demanded what they consider their fair share, often invoking the adage “we eat what we kill.” But in lean years, they’ve also insisted on high pay, threatening to jump to a competitor. What is different this year is that firms seem willing to call that bluff.

“In prior years, you’d see the ratios jump in down years,” said Brian Foley, an executive compensation expert. “You aren’t going to see that this year. The retention argument was always there, but it’s tough to make that argument this year because much of the Street is down. Where are they going to go? People are cutting back or even eliminating investment banking. They’re laying people off. A hedge fund? There are only so many hedge funds. And hedge funds haven’t had such a good year, either. Plus, the job security there is weak. It’s a limited opportunity, and now it’s constrained. Private equity is also limited. Those doors are closing.”

And European banks like Deutsche Bank and UBS, which once aggressively poached Wall Street talent, are reeling from the European debt crisis and have all but stopped hiring. UBS announced that it was sharply curtailing its investment banking operations after years of expansion. One Wall Street executive told me that “frankly, what’s different from last year is that the playing field feels even. Last year, they could walk across the street to Deutsche Bank, and we had some defections. This year, there’s very little risk. A top trader isn’t going to walk out the door.”

And a person with knowledge of Mr. Gorman’s decision at Morgan Stanley said he “wants people to think long term.”

Another factor has been the Federal Reserve, which has been closely scrutinizing Wall Street compensation practices in an effort to align incentives with longer-term interests and to curb incentives for excessive risk-taking. “We’re very aware of the environment we’re operating in,” the Morgan Stanley spokeswoman said. “We’re taking a disciplined approach to compensation and trying to align it with shareholder interests. And the bottom line is, it wasn’t a good year.”

Such changes are arguably long overdue. Many people are still enraged by the perverse compensation practices that had the insurance giant American International Group using money from the Troubled Asset Relief Program to pay millions in guaranteed bonuses to employees after investments drove the firm to insolvency. “I know no one is going to shed any tears over these people,” Mr. Driscoll said. “But I know people who are having a tough time keeping it all together. You can manage for a year or so, but eventually the compensation levels we’re seeing are going to catch up with you.”

It remains to be seen whether Wall Street’s newfound pay discipline will stick. A culture in which self-worth is measured by pay isn’t going to change overnight, or even in a few years. But virtually everyone I spoke to agreed that Wall Street pay, while still lofty, will be lower for the foreseeable future, and may never return to the heady days of 2007. “Internally, it’s troubling for people,” one executive told me. “But they’re going to have to change the way they think. In the mid-1990s, everyone did fine, the pay was perfectly respectable, and it didn’t make headlines. The chief executive made $4 million, and you thought that was great. Was anything so wrong with that?”