Northern, WI 1/26/2013 (wallstreetpr) –Chairman and CEO of Morgan Stanley (NYSE:MS), James Gorman, is facing a 30% cut in his salary for 2012, which does not include the new bonus handout.
The 54-year old Gorman will receive $2.6 million in stock options together with a delayed cash incentive of the same amount in addition to his annual pay of $800,000. The combined figure comes to $6 million which is approximately 30% less than the $8.56 million he received in 2011.
Even the 6.9% growth in revenue and a 2% cost-cutting effort by Morgan Stanley (NYSE:MS) could not achieve the 15% target on equity returns as expected by Gorman. The equity returns figure stood at just 5%.
CEO Gorman’s package is far behind the $21 million that Goldman Sachs Group Inc. (NYSE:GS) pays its CEO Lloyd Blankfein and also lags behind the $11.5 million paid by JP Morgan Chase & Co.(NYSE:JPM) to its CEO Jamie Dimon.
Morgan Stanley (NYSE:MS) shares zoomed by 18% in January itself boosted by the fourth quarter results as well as Gorman’s strategy to increase the returns on equity 2-fold. Morgan Stanley (NYSE:MS) stock grew 26% in 2012 after it nosedived 44% in 2011.
Gorman is chasing a yearly savings of $1.6 billion and to accomplish that goal, he has cut about 1,700 jobs in this month alone and has also ordered to defer payments of all incentives to staff whose pay is more the $350,000 and bonus of $50,000.
As per company a rule, Morgan Stanley (NYSE:MS) pays its top brass with stock options because there is a taxation rule in place that doesn’t allow deductions from payments for some executives, except the Chief Financial Officer. The dismal levels of pretax profits gave birth to this rule.
Ruth Porat, CFO, was given 99,835 shares valued at $2.29 million compared to $3.2 million last year. The deputy CFO, Paul Wirth, got 92,070 shares worth $2.12 million.
President of the investment banking division, Colm Kelleher, was the recipient of stock worth $2.41 million against $2.54 million of last year.
$2.03 million and $1.25 million are the values of stock options handed down to COO Jim Rosenthal and CRO KeishiHotsuki respectively.
The shares of Morgan Stanley (NYSE:MS) were up by 0.44% to $22.70. The shares of Goldman Sachs Group, Inc. (NYSE:GS) were down 0.34% to $144.46. The shares of JP Morgan Chase & Co.(NYSE:JPM) were up 1.70% to $47.16.
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