The big money on offer in Wall Street’s competitive cauldron can make it difficult to keep top talent. Still, Morgan Stanley gave its incoming CEO Ted Pick and the two other executives considered for the top job one-time bonuses of $20 million each. The bank, which has seen its stock price tumble this year, disclosed the performance-linked stock awards for Pick, Co-President Andy Saperstein, and incoming Co-President Dan Simkowitz in a filing on Friday. The bonuses are based on fair value calculations of the bank’s current stock price and will vest in 2027.
The bonuses come days after Morgan Stanley named Pick, a 30-year veteran of the firm, as its new CEO, effective Jan. 1. He beat out his counterparts in a three-way race to succeed James Gorman, who will remain executive chairman and may stay on for a year to help the transition.
Pick, 54, leads the bank’s institutional securities division and oversees investment banking, equities, fixed income, capital markets, and research. He has been credited with turning around the brokerage’s equity capital markets business during the financial crisis and engineering a turnaround of its fixed-income division.
He is also a member of the company’s operating committee, management committee, and the Morgan Stanley-MUFG steering committee. In an interview this week, Pick, who will be the first non-Gorman CEO in the firm’s history, said he would continue to follow the same strategy that has made the bank a global powerhouse. He also said the firm’s recent troubles, including an investigation by U.S. regulators into its block trading practices, should stay within its long-term growth plan.
Asked about the firm’s stock slide this year, Pick said it had nothing to do with his decision to become CEO. “Our results have been good, and we will continue to focus on those,” he said. “Our goal is to grow the business.”
While the pay awards are eye-popping, it’s a sign that Morgan Stanley isn’t afraid to reward its top executives when they deserve it. This is a stark contrast to many other firms in the industry, which have reined in CEO pay and are focusing more on rewarding employees who contribute to strong financial results. The trend toward rewarding employees whose contributions are tied to financial results has been partly driven by increased scrutiny of pay practices. It’s a practice that has been pushed by lawmakers and investors in the United States and in other countries. Several prominent financial firms have seen their share prices plunge this year as the sector struggles amid regulatory scrutiny and a slowdown in trading. Shares of Morgan Stanley have dropped 17 percent this year. Those in Goldman Sachs, Citigroup, and JPMorgan Chase have fallen even more. Investors have been worried that the industry’s low-interest rate environment will hamper profit growth. That’s been confirmed recently as the Federal Reserve has held off raising rates. Investors also have been concerned about the impact of tariffs on China’s economy, which could prompt a trade war with the United States.