Morgan Stanley almost doubled Chief Executive Officer James Gorman’s pay to $18 million, the most in his four years leading the firm.
Gorman, 55, received a $6 million long-term incentive and $5.09 million in deferred cash for his work in 2013, New York-based Morgan Stanley said today in a regulatory filing. He also got a $316,000 cash bonus and $5.09 million in stock in addition to his $1.5 million salary.
Morgan Stanley shares jumped 64 percent last year as profit margins in the retail brokerage improved and revenue from equity trading was the highest since the financial crisis. Still, the firm had a 5 percent return on equity, unchanged from a year earlier and short of Gorman’s 10 percent goal.
“The CEO, through strong leadership and commitment, substantially improved the company’s strategic positioning,” the board’s compensation committee wrote in the filing. “The results of this repositioning started to be realized in the company’s performance for 2013.”
Gorman got a $9.75 million pay package a year earlier, including a $3.75 million long-term incentive dependent on the bank hitting performance targets. His bonus was made up of $2.63 million in stock options and $2.58 million in deferred cash in addition to his $800,000 salary.
The raise was Gorman’s first since he took over as CEO for John Mack, 69, at the beginning of 2010. After receiving $14 million for that year, his pay dropped to $10.5 million for 2011 and fell again the next year. Erskine Bowles, 68, who joined the firm’s board in 2005, is chairman of the compensation committee.
Gorman’s immediate cash bonus also is his first since his initial year as CEO. Morgan Stanley is increasing the amount of bonuses that top traders and bankers receive immediately, while cutting the portion of revenue set aside for pay in its institutional securities division.
The bank will defer 50 percent to 98 percent of bonuses for employees who have both total pay of at least $350,000 and incentive pay of $50,000, a person briefed on the matter said earlier this year. In 2013, that group had 100 percent of its bonuses deferred.
Gorman’s pay package topped Bank of America Corp. CEO Brian T. Moynihan’s $14 million and the $14.5 million that Citigroup Inc. awarded to CEO Michael Corbat. Goldman Sachs Group Inc.’s Lloyd C. Blankfein received at least $23 million and JPMorgan Chase & Co.’s Jamie Dimon got $20 million.
Gorman’s long-term incentive awards will convert into shares in 2017, based on meeting targets related to return on equity and relative total shareholder return, according to the filing. They will pay out fully if the bank earns a 10 percent average ROE over three years and matches the performance of the 82-company Standard & Poor’s 500 Financials Index.
Gorman received $1.27 million of performance stock units, or PSUs, that were granted as part of his 2010 package. That represented 63 percent of the shares that were originally granted, as the firm didn’t reach goals set for return on equity.
Gorman missed out on performance stock units granted as part of his 2009 pay after the firm missed the targets attached to those awards in the three years ended in 2012. Those PSUs were valued at $2.9 million when he received them.
Morgan Stanley gave $14.5 million compensation packages to Greg Fleming, 51, who oversees the bank’s wealth and asset-management units, and Colm Kelleher, 56, who leads the trading and investment-banking division. Chief Financial Officer Ruth Porat, 56, received total pay of $12 million and Chief Operating Officer Jim Rosenthal, 60, got $10.5 million.