Morgan Stanley raised CEO James Gorman’s pay package to $33 million after the company’s most profitable year despite the pandemic gloom.
Gone are the bewildering days of the Coronavirus Pandemic when executives’ salaries and bonuses felt the shocking tinge of the ensuing economic downtown. Now, a number of American companies, including Morgan Stanley and JPMorgan Chase, acknowledge that stressed-out executives cannot reinstate the business to its pre-Pandemic glory days for partial pay.
Morgan Stanley CEO James Gorman’s pay in 2020 was $33 million for steering the Wall Street firm without axing jobs despite the upheaval caused by the coronavirus pandemic. Gorman’s salary is a phenomenal 22% raise for a year in which the investment bank generated record revenue, announced two megabillion dollar acquisitions, and successfully avoided one of the worst pandemic-led recession.
James Gorman gets 22% salary raise in 2020
Here’s how much James Gorman made in total compensation during fiscal year 2020, according to a securities filing on Friday. James Gorman’s salary ($33 million) is comprised of four parts: a base salary of $1.5 million; a deferred equity award of $7.875 million; a cash bonus of $7.845 million; and a performance-vested equity award of $15.75 million.
Two-thirds of Gorman’s stock award is tied to how well he steers through the pandemic-recession over the next few years.
James P. Morgan, Chairman of the Board and CEO. (Image: Morgan Stanley)
The Morgan Stanley executive was paid $27 million for his work in 2019.
Morgan Stanley’s directors based Gorman’s pay raise on the investment firm’s record financial performance in 2020 and Gorman’s progress in implementing the bank’s long-term strategy, it said.
Bank’s profit crushes pandemic gloom
Under his leadership, Morgan Stanley produced full-year net revenue of $48.2 billion, compared with $41.4 billion a year ago. It largely benefited from the market’s swift recovery from the ongoing coronavirus crisis.
“The firm produced a very strong quarter and record full-year results, with excellent performance across all three businesses and geographies,” CEO James Gorman said in a statement, adding that the bank’s long-term strategy with the acquisitions of E*Trade and Eaton Vance “serve us well.
Unlike other American banks, Morgan Stanley was an active name in M&A activity throughout the year. Gorman negotiated two back-to-back deals to acquire E*Trade Financial Corp. and Eaton Vance Corp., strengthening the firm’s presence in retail stock trading and investment management, respectively.
Morgan Stanley Times Square 1585 Broadway Headquarters (Image: Morgan Stanley)
Early in 2020, the bank announced it would buy E*Trade for $13 billion, launching Morgan Stanley into the low-cost brokerage space and adding 5 million new customers. This was the largest acquisition deal made by a bank since the financial crisis.
In October, Gorman announced a $7 billion acquisition of Eaton Vance, making Morgan Stanley one of the world’s biggest asset managers, almost doubling its assets under management to an astounding $1.2 trillion.
Shares of Morgan Stanley rose by 34% in 2020 and are up another 8% so far in 2021, outpacing the S&P 500 Index on both counts.
James Gorman’s salary in 2020 was $1.5 million more than that of rival JPMorgan Chase CEO James Dimon, who has been the highest-paid bank executive for past several years.
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