Gorman's compensation for 2013 could rise to $18 million under a
long-term incentive plan, if he meets certain performance targets in
the future, the filing said.
But Gorman, whose performance was cited by Morgan Stanley's board of
director as "exceeding expectations," could have reaped total
compensation of $20 million or more if the board had determined that
the bank had "substantially exceeded expectations."
The board's compensation committee based Gorman's pay on its finding
that "Morgan Stanley's performance was strong, with room for
continued progress, and Mr. Gorman's individual performance as
exceeding expectations," the bank said in its filing.
Of Gorman's total compensation package, only his $1.5 million base
salary and $316,000 cash bonus were awarded immediately.
Morgan Stanley was one of the best-performing financial stocks last
year, up 64 percent, as investors saw signs of progress in the
bank's years-long turnaround plan engineered at the height of the
Although still less profitable than rivals, Morgan Stanley finished
its acquisition of the Smith Barney business from Citigroup Inc <C.N>,
whittled down more of a big book of problematic fixed-income trades,
and laid out plans to hit a return-on-equity of 10 percent in the
In describing its rationale for Gorman's pay, the board cited those
factors, as well as cost-cutting, a narrowing of Morgan Stanley's
credit-default swap spreads — indicating the bond market views the
bank as less risky — and the start of a stock repurchasing program
for the first time since the financial crisis.
[to top of second column]
This week, Morgan Stanley said it would build on that program after
the Federal Reserve approved its plan to buy back $1 billion worth
of more stock and raise its dividend.
The bank still has work to do.
Its return-on-equity last year was less than half of Gorman's
target, and rivals including Goldman Sachs Group Inc <GS.N> and
JPMorgan Chase & Co <JPM.N> are more profitable and further along in
plans to return excess capital to shareholders.
Goldman's board awarded its CEO, Lloyd Blankfein, an estimated $23
million compensation package, while JPMorgan Chase CEO Jamie Dimon
received $20 million.
Under Gorman's pay package, he will also receive $10.2 million worth
of deferred compensation, half in cash and half in stock, and up to
$6 million worth of long-term incentive compensation that he can
receive if Morgan Stanley hits the 10 percent return target and
shareholder returns above the S&P Financials Index.
(Reporting by Lauren Tara LaCapra; editing by Leslie Adler)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.