James P. Gorman, the chief executive of Morgan Stanley, will receive a huge raise in his base salary this year, but his overall pay package for 2012 was down from 2011, according to a filing Thursday with the Securities and Exchange Commission.
Mr. Gorman made $9.75 million in 2012, down 7 percent from 2011. The firm had previously disclosed pieces of Mr. Gorman’s pay, like some incentive bonuses, but on Thursday, the firm revealed the value of his entire package. He was also granted performance-based stock compensation valued at almost $3.75 million in 2012.
The firm also said that his base salary in 2013 would double to $1.5 million, or $28,846.15 a week. The firm’s board said in the filing that Mr. Gorman’s base salary was raised to bring it in line with the salaries of other bank chiefs. The chief executive of Goldman Sachs, Lloyd C. Blankfein, for instance, makes a base salary of $2 million.
Base salaries across Wall Street rose sharply after the financial crisis. Traders and bankers have historically been paid a relatively small base salary and a big one-time bonus based on their financial performance. Regulators, however, have argued that this type of pay system gives employees incentives to take unnecessary risks and have pushed banks to increase the amount of fixed compensation.
Still, Mr. Gorman’s overall pay in 2012 was down, partly because of the firm’s challenges. C. Robert Kidder, the board’s lead independent director, said in the filing that “2012 was a transition year for Morgan Stanley, and management along with much of the organization saw reduced compensation.” Still, he said the board was “confident” in Mr. Gorman’s strategic plan.
Morgan Stanley was badly bruised during the financial crisis. Mr. Gorman, who took over as chief executive in 2010, had been working hard to reduce the firm’s risk profile, slimming down divisions like fixed income and expanding steadier units like wealth management. The firm’s stock was up more than 25 percent in 2012.
The board also increased the base salaries of Mr. Gorman’s top deputies. Gregory J. Fleming, who leads the firm’s wealth management division, and Colm Kelleher, who runs institutional securities, will now make a base salary of $1 million, or $19,230.77 a week, as do all members of the firm’s operating committee. Last year the two made a base of roughly $750,000 each.
So far the company has disclosed compensation for these two men valued at $6.4 million. It is expected that they will also be awarded deferred cash. The total value of their compensation won’t be known until later this year, but it will be lower than last year, according to a person briefed on the matter who spoke on condition of anonymity.
DealBook: Morgan Stanley's Chief Gets a Base Salary Raise
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DealBook: Morgan Stanley's Chief Gets a Base Salary Raise
