8-KOther Events

MORGAN STANLEY 8-K Report, Corporate Update (Jan 18, 2019)

Filed January 18, 2019For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley's 8-K filing from January 18, 2019, details the 2018 compensation for Chairman and CEO James P. Gorman. The Compensation Committee recognized Mr. Gorman's leadership and the Firm's strong financial performance in 2018, which included record revenues and earnings. This positive performance led to a notable increase in Mr. Gorman's overall compensation package, reflecting the company's strategic objectives. Key aspects of Mr. Gorman's 2018 compensation include a base salary, cash bonus, deferred equity award, and a significant performance-vested equity award. A substantial portion (75%) of his incentive compensation is deferred over three years and is subject to clawback provisions. Notably, 100% of his deferred incentive compensation for 2018 is in the form of equity awards, further aligning his interests with those of the shareholders.

Key Highlights

  • 1Morgan Stanley's 2018 financial performance saw record net revenues of $40.1 billion and pre-tax income of $11.2 billion.
  • 2Net income significantly increased to $8.8 billion in 2018, up from $6.1 billion in 2017.
  • 3Return on average common equity (ROE) improved to 11.8% in 2018, meeting the firm's strategic objective.
  • 4Return on average tangible common equity (ROTCE) was 13.5%, also within the firm's 2018-2019 strategic objective.
  • 5James P. Gorman's 2018 compensation package includes a base salary, cash bonus, deferred equity, and a performance-vested equity award.
  • 675% of Mr. Gorman's incentive compensation is deferred over three years and subject to clawback.
  • 7100% of Mr. Gorman's deferred incentive compensation for 2018 is in equity awards, an increased proportion from prior years.

Frequently Asked Questions

For 2018, Morgan Stanley reported record net revenues of $40.1 billion, pre-tax income of $11.2 billion, and net income of $8.8 billion. The return on average common equity (ROE) was 11.8%, and the return on average tangible common equity (ROTCE) was 13.5%.

Mr. Gorman's 2018 compensation consists of four components: a $1.5 million base salary, a $6.875 million cash bonus, a $6.875 million deferred equity award, and a $13.75 million performance-vested equity award. The performance award is contingent on the firm meeting specific return on equity and relative total shareholder return goals over a three-year period.

Consistent with prior years, 75% of Mr. Gorman's incentive compensation is deferred over three years and is subject to clawback provisions. For 2018, 100% of this deferred incentive compensation is delivered in the form of equity awards, representing an increased proportion compared to previous years, thereby enhancing alignment with shareholder interests.

Yes, the Compensation Committee adjusted the performance goals for the performance-vested equity award. The return on equity goals for earning a portion of the award were increased from 10% to 11%, and for earning a maximum payout of 1.5 times that portion, the goals were increased from 11.5% to 12.5%. The threshold for cancellation without payout was also adjusted from less than 5% to less than 6%.