Morgan Stanley paid James Gorman $37M in last year as CEO

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By Dan Sears

Morgan Stanley’s board awarded James Gorman a handsome 17% raise raise in 2023, making his total compensation for his last year as the bank’s chief executive $37 million.

On top of his $1.5 million base salary, Gorman received a cash bonus of just under $9 million, according to a regulatory filing Friday reviewed by Bloomberg.

Three-fourths of the 65-year-old bank boss’s bonus will be paid in deferred stock over the course of three years, per the filing, Bloomberg reported.

Gorman’s compensation marks a 17% increase from 2022, when his annual earnings were slashed by 10%, to $31.5 million, because of “a challenging economic and market environment,” Morgan Stanley’s board said at the time.

Despite Gorman’s hefty pay increase, Morgan Stanley reported a hit to its 2023 fiscal year earnings last week, when it said profits plunged 32% year-over-year, to $1.5 billion.

James Gorman received $37 million in compensation for 2023, his final year as Morgan Stanley’s CEO. He moved to an executive chairman position at the start of this year, and will retire come May. AFP via Getty Images
Ted Pick, 55, succeeded Gorman as CEO this month. His base pay was lifted from $1 million to $1.5 million for 2024, to align more with what Gorman received when he was in the role. REUTERS

Net income fell to $1.5 billion, or 85 cents per diluted share, in the three months ended Dec. 31, compared with $2.2 billion, or $1.26 per diluted share, a year earlier.

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“We remain constructive on the year ahead,” new CEO Ted Pick said in his first earnings conference call after taking the helm from Gorman this month, who moved into an executive chairman role.

Gorman is set to officially retire come May, ending his nearly two-decade tenure at the firm.

Morgan Stanley also said in Friday’s filing that its compensation committee approved a new base salary for Pick, from $1 million to $1.5 million, to lift his earnings with Gorman’s base salary when he was CEO, according to Bloomberg.

Pick’s raise was retroactive to Jan. 1, per Bloomberg.

In a rare move for Wall Street, the two other contenders for the CEO role didn’t leave the bank when they missed out on the promotion.

All three candidates — 55-year-old Pick; Andy Saperstein, who heads the company’s wealth management and global marketing divisions; and head of investment management Dan Simkowitz — all received special bonuses worth a whopping $20 million each.

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The share-based awards were announced in Securities and Exchange Commission filing in October— one day after the Wall Street giant ended months of speculation about who would fill Gorman’s shoes.

Saperstein has since gained oversight of the firm’s asset-management business, in addition to his role as co-president, and Simkowitz — or “Simko” as he’s known as by his colleagues — replaced Pick as co-president alongside Saperstein.

The bank added in the filing that the $20 million each for Pick, Saperstein and Simkowitz “is approximately the average of the annual variable compensation of the three executives,” and consists of 60% performance stock units, with a performance period of 2024 to 2026 that will convert to shares in 2027.

Morgan Stanley reported a hit to its 2023 fiscal year earnings last week, when it said profits plunged 32% year-over-year, to $1.5 billion. AP

The performance stock units only pay out in full if the company achieves specific financial goals, though those targets weren’t immediately clear.

Each of the executives also received a 40% restricted-stock units that vest and become shares in January 2027.

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“The committee granted the awards in acknowledgment of the board’s assessment of the criticality to the continued success of Morgan Stanley of ensuring that each executive continues their outstanding leadership in their new roles,” the SEC filing said.

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