Morgan Stanley Said to Reduce Gorman’s Pay 25% From 2010

Morgan Stanley CEO James Gorman
James Gorman, chief executive officer of Morgan Stanley. Photographer: Scott Eells/Bloomberg

Morgan Stanley, the sixth-largest U.S. bank by assets, paid Chairman and Chief Executive Officer James Gorman $10.5 million for 2011, a 25 percent decrease from the previous year, a person familiar with the decision said.

Gorman, 53, will get 277,768 restricted shares, valued at $5.1 million at today’s closing price of $18.39, according to a filing with the U.S. Securities and Exchange Commission. He won’t receive an immediate cash bonus, and the rest of his pay is composed of salary, deferred cash and compensation tied to company performance measures, said the person, who asked not to be identified because Gorman’s total pay hasn’t been announced.

Morgan Stanley is cutting pay for senior investment bankers and traders an average of 20 percent to 30 percent, people with knowledge of the decision said this week. The New York-based firm is capping immediate cash bonuses at $125,000 as it defers a greater share of awards, a person briefed on the plan said.

Gorman’s pay for 2010 was $14 million, including 129,809 shares with a total value of $3.9 million at the time, and $3.5 million of stock options. He wasn’t awarded options for 2011.

Morgan Stanley’s shares fell 44 percent in 2011, the biggest annual decline since 2008. The firm rose 5.4 percent yesterday after reporting a narrower fourth-quarter loss than analysts estimated, and has gained 22 percent this year.

Profit Declines

Profit fell 13 percent last year to $4.11 billion as the firm had a 4 percent return on equity, below Gorman’s goal of “mid-teens.” While Morgan Stanley posted the only trading revenue increase among the major U.S. banks, excluding accounting gains, the firm had per-share losses in two of the past three quarters as it took charges to eliminate swap contracts purchased from MBIA Inc. and to convert Mitsubishi UFJ Financial Group Inc.’s preferred stake to common shares.

Total compensation for each member of the firm’s operating committee fell at least 20 percent, and all members won’t receive an immediate cash bonus, the person said.

Chief Financial Officer Ruth Porat was awarded 176,221 restricted shares worth $3.2 million, according to a filing. Last year, she received stock and options worth $5.2 million.

Colm Kelleher, co-president of the institutional securities group who oversees trading, received 139,832 restricted shares, valued at $2.6 million. Paul J. Taubman, the co-president of ISG who runs investment banking, was granted 187,234 restricted shares worth $3.4 million.

Total compensation for the two co-presidents was the same, the person said. Last year, both men received shares valued at $4.1 million and options worth $1.5 million.

Greg Fleming, who runs the firm’s brokerage and asset-management businesses, received 187,234 restricted stock units worth $3.4 million. Last year, he received stock and options worth $4 million.

Jim Rosenthal, the bank’s chief operating officer, got $2.9 million of restricted shares. Chief Risk Officer Keishi Hotsuki received $1.8 million worth and Paul Wirth, deputy CFO, got $1.1 million worth. Eric Grossman, who was named chief legal officer earlier this month, was awarded shares worth about $980,000.

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