Home / Industry / Banking /  Morgan Stanley starts cost-cutting plan with CEO, slashes Gorman's salary by 7%

Morgan Stanley just had its most profitable year on record. It wasn’t enough for its chief to land a raise.

James Gorman’s compensation fell as the firm announced he will receive $27 million for 2019, according to a regulatory filing Friday. That’s a 6.9% decline from the prior year and on par with the package the chief executive officer received in 2017.

The move is another signal that the New York-based bank is focused on keeping costs down. It recently embarked on a plan to cut 2% of its global workforce and this week elevated the fewest executives to managing directors since 2002. The firm has set an ambitious goal to boost its profitability metrics and slash the amount it spends to book every new dollar of revenue. It wants to push the so-called efficiency ratio to below 70% from 73% in 2019.

The step-down in pay for the CEO will probably have a knock-on effect for the rest of its senior management.

The bank this week reported a massive surge in bond-trading revenue for the fourth quarter, which helped push its 2019 revenue and net income to a record, and its market value above that of Goldman Sachs Group Inc.

Morgan Stanley shares returned 33% last year, including reinvested dividends, outpacing the 32% gain in the S&P 500 Financial Index.

Gorman’s package consists of $1.5 in salary and a $6.4 million bonus. He also got $19.1 million in long-term awards, which pay out in shares and are partially tied to return on equity and shareholder return targets.

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