Morgan Stanley paid James Gorman $37mn in his final year as CEO

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Morgan Stanley paid James Gorman $37mn in 2023 for his final 12 months as chief executive of the Wall Street bank, a 17.5 per cent increase from the prior year despite the bank’s lower profits.

Morgan Stanley’s compensation committee said it had based the pay decision in part on Gorman’s “exemplary execution of CEO succession” and praised his leadership of the bank. 

“Over his 14-year tenure as CEO and during 2023, Mr Gorman reshaped the firm into a stronger and more balanced institution positioned for long-term growth,” Morgan Stanley said in a regulatory filing on Friday. 

The $37mn for Gorman, up from $31.5mn for 2022, was higher than the pay for longtime JPMorgan Chase chief executive Jamie Dimon, who earned $36mn for 2023, according to a filing on Thursday.

The pay for 2023 brings Gorman’s total compensation during his time as chief executive of Morgan Stanley to almost $338mn. Gorman has also been one of the biggest sellers of stock among US bank executives, cashing out more than $40mn in Morgan Stanley shares in 2023. 

Morgan Stanley’s compensation committee said Gorman had “successfully accomplished an orderly, multiyear CEO succession planning process”. He officially stepped down as Morgan Stanley chief executive at the start of the year and was replaced by Ted Pick, though he remains executive chair of the bank’s board of directors.

The two other top candidates for the top job — Andy Saperstein and Dan Simkowitz — are staying on at Morgan Stanley as co-presidents to Pick.

Gorman was chief executive of Morgan Stanley from 2010 until the end of 2023, during which time the bank’s stock price tripled as Wall Street cheered his strategy to expand in wealth and asset management.

But profitability at the bank’s wealth management business has sputtered as the US Federal Reserve lifted interest rates, resulting in clients investing in products that are less lucrative for banks and asset managers. 

Morgan Stanley warned this week that its wealth management business would fall short of a profitability target in near future, dinging the group’s stock price. Its investment banking and trading division has also suffered from lower revenues. 

In 2023, Morgan Stanley’s net profits fell 18 per cent to $9.1bn, the lowest in four years.