Yahoo Finance Is Morgan Stanley (NYSE:MS) Excessively Paying Its CEO?
In 2010 James Gorman was appointed CEO of Morgan Stanley (NYSE:MS). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Morgan Stanley
How Does James Gorman's Compensation Compare With Similar Sized Companies?
Our data indicates that Morgan Stanley is worth US$69b, and total annual CEO compensation is US$28m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.5m. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
It would therefore appear that Morgan Stanley pays James Gorman more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Morgan Stanley has changed over time.
Is Morgan Stanley Growing?
Over the last three years Morgan Stanley has grown its earnings per share (EPS) by an average of 22% per year (using a line of best fit). Its revenue is down -3.6% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.
Has Morgan Stanley Been A Good Investment?
Most shareholders would probably be pleased with Morgan Stanley for providing a total return of 40% over three years. 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.
In Summary...
We examined the amount Morgan Stanley pays its CEO, and compared it to the amount paid by other large companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Morgan Stanley (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
