In a major leadership shuffle, Morgan Stanley has announced that Ted Pick, co-president of the Institutional Securities Group and co-head of corporate strategy, will succeed James Gorman as CEO in January 2024. The move comes after a competitive race for the top position, with Pick outpacing contenders Dan Simkowitz and Andy Saperstein.
As part of their new roles, both Simkowitz and Saperstein have received promotions within the company. Simkowitz will replace Pick as head of the Institutional Securities Group, while Saperstein will assume Simkowitz's role as head of wealth management.
In a show of recognition for their contributions to the firm, Morgan Stanley is awarding one-time equity-based bonuses of $20 million each to Pick, Simkowitz, and Saperstein. The bonuses comprise 60% performance stock units (for the period 2024-2026) and 40% restricted stock units set to convert to shares in 2027. The bonus amount reflects their average annual variable compensation. The bank's board approved these awards in an effort to tie compensation to value creation over several years without promoting imprudent risk-taking and to incentivize leadership continuity.
In 2022, each executive received a base salary of $1 million. Including bonuses and performance-related awards, Pick earned $23.5 million, Saperstein $20.5 million, and Simkowitz $18 million.
Following the announcement on Monday, Morgan Stanley’s share price rose nearly 1%, to $70.22. Salary.com reported that Pick's total earnings for 2022 were $28.2 million, including a $1 million base pay, an over $8.6 million bonus, and more than $18.4 million in stock awards. His earnings are expected to increase significantly when he takes over as CEO in January 2024. Gorman's 2022 earnings were $31.5 million, a 10% reduction due to a challenging economic and market environment. Saperstein and Simkowitz earned $22.7 million and $20.5 million respectively in 2022, each with a $1 million base pay.
InvestingPro Insights
As Morgan Stanley navigates its leadership transition, the InvestingPro data and tips provide some key insights. The company's market cap stands at a substantial 115.2B USD, with a P/E ratio of 12.39, indicating a fair valuation relative to earnings. Over the last twelve months as of Q3 2023, the company achieved a revenue of 53.38B USD, despite a slight decline of 3.38% in revenue growth.
Two noteworthy InvestingPro Tips for Morgan Stanley include the fact that management has been aggressively buying back shares, which can be a positive signal of confidence in the company's future. However, a declining trend in earnings per share is also noted, which could be a cause for concern. The company has managed to maintain dividend payments for 31 consecutive years, suggesting a commitment to returning value to shareholders despite the challenges.
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