Your Bonus Had To Die So That James Gorman’s Could Live

Congrats to Jim Gorman on a strong quarter...wait, really?
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There were a lot of cutbacks at Morgan Stanley this year: Layoffs, pay cuts, shrinking bonuses, more layoffs.

Even if they were conducted with slightly more humanity than in the past, and with some linguistic innovation, to boot, such slashing is hard work. Luckily, it paid off.

Last year, Gorman moved the firm closer to financial targets by cutting expenses, improving bond-trading results and boosting companywide returns. Return on equity climbed to 8 percent, almost reaching the 9 percent to 11 percent goal for the end of this year. The stock posted its biggest annual gain since 2013, with much of it happening after Donald Trump’s election as U.S. president spurred investor hopes for higher interest rates, lower taxes and lighter regulation.

And that all means that at least one bonus at the House of Morgan not only survived, but thrived: Especially for the big boss, James Gorman, who received a 7.1% pat on the head from the board for his troubles.

Gorman, 58, received restricted stock valued at about $5 million based on Wednesday’s closing price, according to a regulatory filing Friday. His $22.5 million package also included $1.5 million in salary, said Mark Lake, a company spokesman….

Gorman’s pay for 2015 was $21 million, down 6.7 percent from the prior year.

Make that two: Gorman’s deputy, Colm Kelleher, has done an admirable job resurrecting the bank’s fixed-income business, and so he gets to have several dozen laid off peoples’ bonuses, too.

Mr. Kelleher received a $2.4 million grant, down from 2015. Overall compensation for Mr. Kelleher, who became Mr. Gorman’s sole No. 2 a year ago, will be higher than in 2015, a person familiar with the matter said.

Morgan Stanley Lifts Gorman’s 2016 Pay 7.1% to $22.5 Million [Bloomberg]
Morgan Stanley CEO Gets 7% Raise; Goldman Trims Stock-Pay for Some Executives [WSJ]

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James Gorman Will Say Something Nice About Wall Street When Wall Street Earns It

If you're looking for a cheerleader, go bark up another tree. “Say you want to be out ahead of it and give a lot of speeches and talk about all the good we’re doing,” Gorman said today at an industry conference in New York. “And then some trader does some stupid thing like this guy at UBS did and he’s in jail and all bets are off,” Gorman said. He was referring to Kweku Adoboli, the UBS AG trader convicted of fraud this month in the largest unauthorized trading loss in British history...Traders at New York-based Morgan Stanley had too much latitude in the past, “what I call having an outsized sandbox,” Gorman, 54, said at the conference, which was sponsored by the Securities Industry and Financial Markets Association. “Until we can be really confident we’ve got discipline around the sandboxes, I think you have to be really careful not to be holier than thou,” Gorman said. “We’re going to be in the doghouse for a while.” Incidentally, this would a good time to mention that Gorman's bonus policy instituted last January-- STFU or GTFO-- still stands.