James Gorman, chief executive of Morgan Stanley, will receive $27m in total compensation for 2019, a 7 per cent reduction from his 2018 award of $29m.
The lower pay comes despite Morgan Stanley reporting record revenues and net income of $41bn and $9bn respectively, in 2019. The bank ended the year with a strong fourth-quarter result, buoyed by robust activity in the capital markets, and by raising its long-term goals for return on equity.
Mr Gorman said the results “met all of our stated performance targets”. In a regulatory filing, the board noted Mr Gorman’s “outstanding individual performance”.
The lower pay package, according to a person familiar with the matter, was designed to reflect both lower compensation awards at Morgan’s Stanley’s operating businesses — part of the company’s cost-control programme — and the fact that the company cut 1,500 jobs, or about 2.5 per cent of its workforce, in December.
Morgan Stanley’s shares returned 33 per cent last year, slightly better than the broader market but trailing bank indices and the shares of its closest competitor, Goldman Sachs, which rose 40 per cent. Finance stocks broadly have enjoyed a rally in recent months, as fears of a recession in 2020 have faded.
Since Mr Gorman became chief executive of the company in 2010, Morgan Stanley’s shares have returned over 100 per cent, almost twice as much as Goldman Sachs’.
Morgan Stanley’s just-announced long-term goal for return on tangible equity of up to 17 per cent, as compared with 13 per cent last year, is based in part on higher efficiency. For 2019, compensation represented over 60 per cent of the bank’s overhead costs.
Mr Gorman’s pay will consist of $1.5m in base salary, a cash bonus of $6.4m, a deferred stock award of $6.4m, and a performance-based stock award valued at $12.7m. The last portion of the package vests after three years if the bank hits targets for total shareholder returns and return on equity.
Morgan Stanley is the first of the big Wall Street banks to disclose its chief executive’s 2019 compensation. In 2018, Mr Gorman was the second-highest paid leader of the six biggest banks, trailing only Jamie Dimon, who earned $31m.