Stock Analysis

Increases to Morgan Stanley's (NYSE:MS) CEO Compensation Might Cool off for now

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Performance at Morgan Stanley (NYSE:MS) has been reasonably good and CEO James Gorman has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 20 May 2021. However, some shareholders may still want to keep CEO compensation within reason.

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How Does Total Compensation For James Gorman Compare With Other Companies In The Industry?

Our data indicates that Morgan Stanley has a market capitalization of US$158b, and total annual CEO compensation was reported as US$30m for the year to December 2020. That's slightly lower by 6.6% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.5m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$12m. Hence, we can conclude that James Gorman is remunerated higher than the industry median. Furthermore, James Gorman directly owns US$79m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$1.5m US$1.5m 5%
Other US$28m US$30m 95%
Total CompensationUS$30m US$32m100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Morgan Stanley sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NYSE:MS CEO Compensation May 14th 2021

Morgan Stanley's Growth

Over the past three years, Morgan Stanley has seen its earnings per share (EPS) grow by 29% per year. Its revenue is up 32% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Morgan Stanley Been A Good Investment?

We think that the total shareholder return of 68%, over three years, would leave most Morgan Stanley shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 2 which don't sit too well with us) in Morgan Stanley we think you should know about.

Switching gears from Morgan Stanley, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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