The U.S. Federal Reserve's executive compensation reforms are not significantly burdensome for Morgan Stanley and Goldman Sachs as the two Wall Street giants largely met the new standards even prior to the credit crisis, Sanford C Bernstein said.

The current goal of the compensation vigilantes - more equity, less cash, long vesting and potential claw back of losses - is not a threat to most of the business franchises of the investment banks, analyst Brad Hintz wrote in a note to clients.

The Federal Reserve has embarked on a deeper review of pay at the biggest financial firms, and the Securities and Exchange Commission is trying to empower shareholders with more control over executive compensation.

The goal is to encourage compensation structures that align the pay of Wall Street workers with the long-term success of the company instead of rewarding short-term gains.

Executives at Morgan Stanley and Goldman have long held a substantial portion of their wealth in deferred common stock, Hintz said.

Goldman Sachs said last week it plans to pay top managers their 2009 bonuses in stock, rather than cash, as it seeks to deflect outrage over a near-record pay haul months after it repaid billions of dollars in taxpayer aid.

However, sectors such as M&A advisory do not require significant capital and bankers may find working for a financial boutique, such as Evercore Partners , Greenhill & Co or Lazard Ltd , more attractive on a risk adjusted basis than staying with a large bank facing regulatory uncertainty, the analyst noted.

In a worse case, the new compensation rules could lead to a new model of Wall Street in which new talent is trained and gains client relationships at the large capitalization trainer banks and exits later in their careers to monetize their Rolodexes at boutiques, private equity firms and hedge funds outside the spotlight of government oversight, Hintz said.

(Reporting by Anurag Kotoky in Bangalore; Editing by Deepak Kannan)