Morgan Stanley CEO contenders pocketed $20M special bonuses

Morgan Stanley granted special bonuses worth $20 million each to incoming Chief Executive Ted Pick and his two deputies, Andy Saperstein and Dan Simkowitz. 

The share-based awards, announced in a filing Friday, follow the firm’s announcement this week that Pick will succeed outgoing CEO James Gorman. In a rare move for Wall Street, the two men who missed out on the top job — Saperstein and Simkowitz — will stay at the bank, with co-president Saperstein gaining oversight of the firm’s asset management business in addition to his role leading wealth management, and Simkowitz replacing Pick as co-president leading the investment banking and trading division.

The board’s succession committee “determined that granting the awards to each of our incoming chief executive officer and co-presidents is in the best interests of the company and its shareholders as the company transitions from 14 years of exceptional leadership by Mr. Gorman,” according to the filing. “The committee granted the awards in acknowledgment of the board’s assessment of the criticality to the continued success of Morgan Stanley of ensuring that each executive continues their outstanding leadership in their new roles.”

Gorman, 65, is handing the reins to Pick following a run that reshaped the Wall Street bank. Pick, 54, is a three-decade veteran of the firm who worked his way up with roles as an analyst, capital markets banker and head of the firm’s equities-trading unit along the way. Pick, for his roles as co-president, head of institutional securities and co-head of corporate strategy, got paid $23.5 million, including base salary, cash bonus and equity awards, for his performance in 2022.

The $20 million each for Pick, Saperstein and Simkowitz “is approximately the average of the annual variable compensation of the three executives,” Morgan Stanley said in the filing.

Each award consists of 60% performance stock units, with a performance period of 2024 to 2026, that convert to shares in 2027, and 40% restricted-stock units that vest and become shares in January 2027. The performance stock units pay out in full only if the company reaches certain financial targets.

The bonuses come amid intense, industrywide focus on compensation and other expenses amid a prolonged slump in dealmaking and concern about the impact a potential recession would have on Wall Street revenue. For Morgan Stanley, that’s meant thousands of job cuts for a firm that employed 80,710 people as of Sept. 30. 

Gorman will remain CEO until the end of the year, then stay on as executive chairman, helping with the transition. Pick begins his new role in January. When Gorman became CEO in 2010, his predecessor John Mack held the role of chairman for two years before handing over that title to Gorman as well.

Gorman’s pay was cut by 10% to $31.5 million for 2022, a year in which profit tumbled and Morgan Stanley’s shares sank. That followed a 6% boost in pay for 2021, when the New York-based firm posted its most profitable year thus far. A year earlier, he vaulted past JPMorgan Chase & Co.’s Jamie Dimon as the best-paid CEO of a major US bank.

Morgan Stanley fell 2.3% to $70.40 Friday. The shares have declined 17% this year, less than the 29% slump for the KBW Bank Index.