Dow Jones/New York
Morgan Stanley awarded its chairman and chief executive, James Gorman, restricted shares valued at $4.5mn for his performance this past year.
Gorman received 127,884 shares, according to a regulatory filing. The stock bonus is part of a pay package that will at least match the $18mn that Gorman took in a year earlier.
Morgan Stanley paid its CEO a $1.5mn salary in 2014. He also received a cash bonus. While the total cash payout won’t be disclosed until later this year, it will comprise a bigger slice of Gorman’s total bonus thanks a decision the firm made last month to pay more of the awards immediately.
Gorman is also expected to receive long-term incentive awards that pay out at a future date if certain performance goals are met. The latest incentive plan will be disclosed later this year.
By many measures, Gorman’s turnaround plan gained steam in 2014. Profits more than doubled, revenue rose by 5%, and the firm inched closer to its return-on-equity target. Excluding fluctuations in the value of its own debt, Morgan Stanley posted an 8.1% return last year. While that’s below Gorman’s 10% goal and well short of what some of Morgan Stanley’s rivals returned, it’s also well above the 5% the firm produced in 2013.
Morgan Stanley’s board had praised Gorman’s work that year, stating in the firm’s annual statement last spring that he had exceeded their expectations in 2013. The New York firm paid Gorman a $1.5mn salary for his work that year. His bonus was divided between $5.4mn in cash and $5.1mn in company shares that vest over three years. Morgan Stanley also awarded him $6mn in long-term incentive pay; Gorman can collect 100% of that figure after if Morgan Stanley averages a 10% return on equity from 2014 to 2016.
Morgan Stanley announced its move to quicker bonus payouts in early December, arguing the shift to higher deferred pay in the wake of the financial crisis-and the practice of expensing those delayed payouts gradually, and produced a hangover effect on its results.
In a memorandum to employees, Gorman wrote in the memo that Morgan Stanley’s financial performance in prior years “required us to defer far more bonus compensation than we felt appropriate from a competitive viewpoint....Our outsized deferrals over those years created a burden on future year earnings.”
Gorman: Windfall bonus.
