With the current negative environment and ongoing recession, Morgan Stanley (NYSE:MS) CEO James Gorman understood the negative media coverage he and the company would receive if he received a significant cash bonus for 2009, and so he opted to take no cash bonus for 2009, although he did receive receive 97,295 “at-risk performance stock units,” which will be tied into his job performance over the next couple of years.
The current value of the stock units offered to Gorman is close to $2.7 million, according to the closing price of $27.80 for the company stock on Friday.
According to the Friday filing with the Securities and Exchange Commission, the stock units could end up being worthless to Gorman if he doesn’t reach minimum performance goals, but they also have the opportunity to double their current value if he does well, making the units worth somewhere around $5.4 million if that were to be the results.
Some of the measurements the company will use to decide whether Gorman is compensated or not are his performance against his major competitors like Bank of America(NYSE:BAC), JPMorgan Chase(NYSE:JPM), Wells Fargo (NYSE:WF) and Goldman Sachs(NYSE:GS), in reference to total shareholder return. Return on the regular common shareholders’ equity is another yardstick the company will use to determine Gorman’s bonus.
In a separte filing with the SEC, Morgan Stanley also revealed Gorman received an additional 194,590 shares of restricted stock he will be allowed to vest over a three-year period, allow it will be tempered to market risk. Their value stands at close to $5.4 million too.
As far as the salary Gorman received for 2009, Morgan Stanley said they paid their CEO $800,000 for the year, confirming other financial media reports.
Citing current economic realities, Morgan Stanley said in a filing that they decided to change the structure of their employee compensation to reflect the negative view and performance of banks and financial institutions; the reason they chose bonuses tied into performance above large, guaranteed cash payouts.
Also per the filing, it was stated that former CEO John Mack also requested to receive no cash bonus for 2009, and was confirmed in one of the filing that he didn’t receive one.
