By Lauren Tara LaCapra
NEW YORK (Reuters) - James Gorman, Morgan Stanley's
Gorman's compensation for 2013 could rise to $18 million under a long-term incentive plan, if he meets certain performance targets in the future, the filing said.
But Gorman, whose performance was cited by Morgan Stanley's board of director as "exceeding expectations," could have reaped total compensation of $20 million or more if the board had determined that the bank had "substantially exceeded expectations."
The board's compensation committee based Gorman's pay on its finding that "Morgan Stanley's performance was strong, with room for continued progress, and Mr. Gorman's individual performance as exceeding expectations," the bank said in its filing.
Of Gorman's total compensation package, only his $1.5 million base salary and $316,000 cash bonus were awarded immediately.
Morgan Stanley was one of the best-performing financial stocks last year, up 64 percent, as investors saw signs of progress in the bank's years-long turnaround plan engineered at the height of the financial crisis.
Although still less profitable than rivals, Morgan Stanley finished its acquisition of the Smith Barney business from Citigroup Inc
In describing its rationale for Gorman's pay, the board cited those factors, as well as cost-cutting, a narrowing of Morgan Stanley's credit-default swap spreads -- indicating the bond market views the bank as less risky -- and the start of a stock repurchasing program for the first time since the financial crisis.
This week, Morgan Stanley said it would build on that program after the Federal Reserve approved its plan to buy back $1 billion worth of more stock and raise its dividend.
The bank still has work to do.
Its return-on-equity last year was less than half of Gorman's target, and rivals including Goldman Sachs Group Inc
Goldman's board awarded its CEO, Lloyd Blankfein, an estimated $23 million compensation package, while JPMorgan Chase CEO Jamie Dimon received $20 million.
Under Gorman's pay package, he will also receive $10.2 million worth of deferred compensation, half in cash and half in stock, and up to $6 million worth of long-term incentive compensation that he can receive if Morgan Stanley hits the 10 percent return target and shareholder returns above the S&P Financials Index.
(Reporting by Lauren Tara LaCapra; Editing by Leslie Adler)