Dive Brief:
- Morgan Stanley gave CEO James Gorman a 22% compensation boost in 2020, to $33 million from $27 million, the bank reported in a filing Friday. With that jump, he passes JPMorgan Chase CEO Jamie Dimon among the best-paid bank CEOs. Dimon's $31.5 million in 2020 compensation remained unchanged from the previous year, JPMorgan reported Thursday.
- Gorman's compensation breaks down to a $1.5 million salary, a $7.875 million cash bonus, a $7.875 million deferred equity award and a $15.75 million equity award that converts to shares only if the bank meets its board's targets for return on tangible common equity (ROTCE) and shareholder return over three years.
- The boost also comes a year after Gorman took a 7% pay cut — despite a 46% increase in profit in 2019 — to mirror a companywide reduction of bonuses.
Dive Insight:
On acquisitions alone, Morgan Stanley had a remarkable 2020. In February, it engineered the $13 billion purchase of E*Trade — the largest such deal since the 2007-08 financial crisis — then followed it up in October with a $7 billion acquisition of investment management firm Eaton Vance. The former deal added 5.2 million client accounts to Morgan Stanley's rolls, carrying $360 billion in assets. The Eaton Vance acquisition nearly doubled — to $1.2 trillion — Morgan Stanley's assets under management.
Morgan Stanley also saw its third consecutive year of record earnings, according to Bloomberg. Full-year revenue jumped 16% to $48.2 billion. Profit rose 22% to $11.0 billion. And ROTCE — one of the metrics upon which some of Gorman's compensation rides — grew to 15.2% from 13.4%, according to a quarterly earnings statement the bank released Wednesday.
On a more granular level, net profits soared 51% in the fourth quarter to $3.4 billion. Trading revenues jumped 32% during the same period, and investment banking fees rose 46%.
"Our firm is at an inflection point and the next decade will be characterized by growth," Gorman said last week in a call with analysts, according to the Financial Times.
Morgan Stanley stock jumped 34% in 2020 — more than twice the 14% gain its rival Goldman Sachs saw, the Financial Times reported. That pushed Morgan Stanley's market value past $130 billion, a 30% premium over Goldman, according to Bloomberg.
All of this played out against a coronavirus pandemic — from which Gorman personally recovered — and during which he vowed not to lay off any Morgan Stanley staff for the remainder of the year.
Morgan Stanley is the second of the six largest U.S. banks to report CEO compensation this year. Behind Dimon's $31.5 million in 2019 were Goldman's David Solomon at $27.5 million, Bank of America's Brian Moynihan at $26.5 million and Citi's Michael Corbat at $24 million. Solomon's pay saw a 19.6% bump from 2018, as 2019 was his first full year leading Goldman Sachs.
Wells Fargo CEO Charlie Scharf took in $36.4 million in total compensation in 2019, according to S&P Global, although some of that comprises a "make-whole award" Wells offered him, intended to replace the value of equity compensation he would forfeit by vacating the top post at BNY Mellon.
