Morgan Stanley Chief Executive James Gorman was awarded a $10.5 million bonus for 2011, down 25 percent from the previous year, according to a source familiar with the matter. All of Gorman's bonus will be deferred for a period of two to three years, including a $5.1 million restricted stock award detailed in a filing with the US Securities and Exchange Commission on Friday evening.
The lower bonuses with tighter restrictions reflect weak performance at Morgan Stanley in 2011, as capital markets reacted to the European sovereign debt crisis and a downgrade of the US bond rating. Clients pulled back sharply on trading and investment banking activity, hurting profits across Wall Street.
Morgan Stanley lost money in two of four quarters and had difficulty meeting profitability targets that were earlier outlined by senior management. Its return on common equity - a key measurement of profitability - was a meagre 3.9 percent from continuing operations for the full year.
Morgan Stanley, like other rivals including Goldman Sachs Group Inc, responded to rough market conditions by cutting staff and salaries. The bank capped cash bonuses at $125,000 for employees, an unusually low amount for a workforce accustomed to multi-million dollar paydays.