8-KOther Events

MORGAN STANLEY 8-K Report, Corporate Update (Jan 17, 2020)

Filed January 17, 2020For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley has disclosed the 2019 compensation package for its Chairman and CEO, James P. Gorman. The total compensation for 2019 was set at $27 million, a decrease from the $29 million awarded in 2018. This compensation is structured across base salary, cash bonus, and significant equity awards, with a substantial portion being deferred and performance-based to align executive interests with shareholder outcomes. The decision reflects the Compensation Committee's evaluation of Mr. Gorman's leadership and the firm's strong financial performance during the year. Investors should note that a large portion of Mr. Gorman's incentive compensation is deferred over three years and is equity-based. Specifically, 75% of his incentive compensation is deferred and subject to clawback provisions. Furthermore, 100% of his deferred incentive compensation is delivered in the form of equity awards, directly linking his compensation to the long-term success of the firm and shareholder value. More detailed information regarding compensation for Mr. Gorman and other named executive officers will be available in the company's proxy statement in April 2020.

Key Highlights

  • 1CEO James P. Gorman's 2019 total compensation set at $27 million, down from $29 million in 2018.
  • 2Compensation includes $1.5M salary, $6.375M cash bonus, $6.375M deferred equity, and $12.750M performance-vested equity.
  • 375% of incentive compensation is deferred over three years and subject to clawback.
  • 4100% of deferred incentive compensation is in the form of equity awards, aligning with shareholder interests.
  • 5Performance-vested equity award is contingent on meeting predetermined goals for average Return on Equity (ROE) and relative Total Shareholder Return (TSR) over three years.
  • 6The Compensation Committee cited Mr. Gorman's strong individual performance and leadership, along with the Firm's strong financial performance, as factors for the compensation decision.
  • 7Additional details on executive compensation will be provided in the company's 2020 proxy statement, expected in April 2020.

Frequently Asked Questions

The filing indicates that while Mr. Gorman's 2019 compensation was set at $27 million, a decrease from $29 million in 2018, it was based on the Compensation Committee's assessment of his individual performance and the firm's strong financial performance. Specific reasons for the reduction are not detailed beyond this general statement, but the structure of the compensation continues to emphasize long-term alignment with shareholder value.

A significant portion of Mr. Gorman's compensation is tied to future performance. Specifically, $12.75 million is in the form of performance-vested equity awards. These awards will only convert to shares if Morgan Stanley meets predetermined performance goals related to average Return on Equity and relative Total Shareholder Return over a three-year period. Additionally, 75% of his incentive compensation is deferred over three years, further linking it to long-term results.

Mr. Gorman's 2019 compensation of $27 million is comprised of: a base salary of $1.5 million, a cash bonus of $6.375 million, a deferred equity award of $6.375 million, and a performance-vested equity award of $12.750 million. The equity awards are designed to align his interests with those of shareholders and are subject to specific performance conditions and deferral periods.

More comprehensive details regarding the incentive compensation programs and the material elements of compensation for Mr. Gorman and other named executive officers will be disclosed in Morgan Stanley's proxy statement for the 2020 annual meeting of stockholders. This document is expected to be filed with the Securities and Exchange Commission in April 2020.