Bloomberg reports that Gorman, 54, probably will forfeit so-called performance-based stock units awarded in 2009 that required the New York-based firm earn a 12 percent average return on equity and have shareholder gains ranking in the top half of a 10-company group during his first three years as CEO. He could have earned shares worth almost $6m if he exceeded those goals.
Instead, Morgan Stanley has produced an ROE of less than 6% with one quarter remaining and ranks ninth in its peer group in terms of shareholder return, beating only Credit Suisse Group AG. Gorman, who’s criticized Wall Street pay as too high, has pledged to improve results, in part by shrinking fixed-income trading and buying the rest of a brokerage joint venture.
'With pay for performance, you don’t always get paid', said Rose Marie Orens, a senior partner at New York-based Compensation Advisory Partners LLC. 'If you always got paid, we’d have to wonder how you stacked the deck. This plan is not a walk in the park, it sounds like they really did set up a performance plan that made sense'.
Colm Kelleher, 55, who now oversees the firm’s trading division, received performance-based stock units, or PSUs, valued at $2.36m, according to the bank’s 2010 proxy filing. Ken deRegt, 56, then-Chief Risk Officer who now runs fixed-income trading, got $1.87m of PSUs.
Hit the link below to access the complete Morgan Stanley article: