8-KOther Events

MORGAN STANLEY 8-K Report, Corporate Update (Jan 22, 2021)

Filed January 22, 2021For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley announced the 2020 compensation for its Chairman and CEO, James P. Gorman. The Compensation Committee cited Mr. Gorman's strong leadership, record financial performance in 2020, and strategic advancements as the basis for his $33 million compensation package. This compensation reflects a significant increase from 2019 and is structured with a substantial portion in deferred equity awards, aligning his interests with shareholders and subject to performance goals. Key strategic initiatives highlighted include the acquisitions of E*TRADE and the pending acquisition of Eaton Vance, which are expected to bolster the Wealth Management and Investment Management segments, respectively. The company emphasized its progress in transforming the business towards more stable revenue streams, which was recognized by a credit rating upgrade from Moody's and strong shareholder returns in 2020. The report also touched upon the Firm's commitment to employee well-being during the COVID-19 pandemic and its enhanced focus on diversity and inclusion.

Key Highlights

  • 1CEO James P. Gorman's 2020 compensation set at $33 million, an increase from $27 million in 2019.
  • 2Compensation is composed of base salary ($1.5M), cash bonus ($7.875M), deferred equity ($7.875M), and performance-vested equity ($15.75M).
  • 375% of incentive compensation is deferred over three years and subject to clawback, with 100% in equity awards.
  • 4Performance-vested equity award is contingent on achieving predetermined goals for average Firm return on tangible common equity and relative total shareholder return over three years.
  • 52020 marked record financial performance with revenues of $48.2 billion and net income of $11 billion, alongside a ROTCE of 15.2%.
  • 6Strategic advancements include the E*TRADE acquisition and pending Eaton Vance acquisition, aimed at enhancing Wealth Management and Investment Management businesses.
  • 7Company's transformation towards stable revenue sources recognized by Moody's rating upgrade to A2 senior and strong relative total shareholder return for 2020.

Frequently Asked Questions

CEO James P. Gorman's total compensation for 2020 was set at $33 million.

His compensation includes a $1.5 million base salary, a $7.875 million cash bonus, a $7.875 million deferred equity award, and a $15.75 million performance-vested equity award.

The performance-vested equity award will convert to shares only if Morgan Stanley meets predetermined performance goals related to average Firm return on tangible common equity and relative total shareholder return over a three-year period.

A significant portion of his incentive compensation (75%) is deferred over three years, subject to clawback, and is entirely delivered in the form of equity awards, directly linking his pay to the company's long-term performance and shareholder value.