Dive Brief:

• Morgan Stanley paid now-Executive Chair James Gorman $37 million for 2023, the bank said Friday in a filing with the Securities and Exchange Commission.
• That represents a 17.5% boost over his compensation for 2022 and ensures he is better-paid than longtime rival Jamie Dimon, the CEO of JPMorgan Chase, during what was Gorman’s last year as Morgan Stanley’s top executive.
• Gorman became Morgan Stanley’s executive chair Jan. 1, making way for Ted Pick to take the reins as CEO. In addition to laying out Gorman’s compensation Friday, the bank said it raised Pick’s base salary to $1.5 million for 2024, to put it in line with what Gorman earned as CEO. The bank paid Pick $23.5 million in 2022, taking into account base salary, cash bonus and equity awards.

Dive Insight:

Gorman’s 2023 compensation breaks down to a $1.5 million base salary and a $35.5 million bonus. As with previous years, 75% of Gorman’s bonus is deferred over three years; the rest — nearly $9 million — is in cash. Additionally, 60% of Gorman’s bonus is based on performance.

Friday’s compensation bump represented somewhat of a victory lap for Gorman as Morgan Stanley reflected on his 14-year tenure as CEO and how far the bank has come since its near-collapse in 2008.

Under Gorman’s leadership, Morgan Stanley’s stock price more than tripled since 2010, and its market capitalization nearly quadrupled to $153 billion, the bank said. 

Additionally, Gorman led a transformation in which the bank put greater focus on wealth and investment management. More than 60% of Morgan Stanley’s pretax profit now comes from those businesses — up from roughly 30% in 2010. Meanwhile, net revenues in wealth and investment management have more than doubled and client assets have more than tripled since 2010, the bank said.

Profit at the bank, however, fell for the second consecutive year in 2023 — to $9.1 billion from $11 billion in 2022. And Morgan Stanley’s return on tangible common equity fell to 12.8% in 2023, from 15.3% a year earlier. Revenue, meanwhile, rose slightly to $54.1 billion, and the bank’s stock price jumped 9.7% throughout 2023.

In Friday’s filing, the bank credited Gorman with “successfully accomplish[ing] an orderly, multiyear CEO succession planning process that demonstrated the world-class quality and depth of Morgan Stanley’s leadership talent.”

The race to succeed Gorman launched in 2021 and involved four major candidates. Pick, formerly the bank’s institutional securities chief, won out in October over Andy Saperstein and Dan Simkowitz, then the heads of wealth management and investment management, respectively. But, in atypical fashion, Morgan Stanley was able to retain both Saperstein and Simkowitz when it offered each of them — and Pick — bonuses worth $20 million. The fourth CEO candidate, former Chief Operating Officer Jon Pruzan, left Morgan Stanley last January, and became president of the investment firm Pretium.

The bank also credited Gorman with “the resolution of many outstanding legal and regulatory matters.” That may well be a nod to the $249 million settlement to which Morgan Stanley agreed this month, to put to rest a Justice Department probe into the bank’s block-trading practices.

As it stands, Gorman’s $37 million package for 2023 ranks as his richest for a single year, topping the $35 million he received for 2021 (again, besting the $34.5 million Dimon earned that year). 

Morgan Stanley cut Gorman’s compensation by 10% in 2022, to $31.5 million. By comparison, JPMorgan Chase kept Dimon’s compensation steady at $34.5 million for 2022 and, in a filing Thursday, disclosed it raised that total to $36 million for 2023.

Gorman’s earned nearly $338 million throughout his time as Morgan Stanley’s CEO, according to the Financial Times. He cashed out more than $40 million in Morgan Stanley shares in 2023, the publication noted.

Compensation packages for the U.S.’s four other largest banks — Bank of America, Citi, Wells Fargo and Goldman Sachs — are expected within the next month. For 2022, Bank of America paid CEO Brian Moynihan $30 million; Goldman Sachs paid CEO David Solomon $25 million; and CEOs Jane Fraser and Charlie Scharf received $24.5 million from Citi and Wells Fargo, respectively.