Published On: Tue, Mar 3rd, 2015

Morgan Stanley CEO James Gorman Says Financial Management Does More Harm than Good

James Gorman's performance-based bonus reflects a financial institution in recovery

James Gorman.jpeg

CEO James Gorman has seen Morgan Stanley recover from the worst financial crisis in the U.S. since the Great Depression and has been rewarded for his leadership.

Morgan Stanley executives received stock-based performance packages that nearly doubled since they were granted three years ago, as reported by Bloomberg. James Gorman’s reward was 113, 510 shares, around 6% more than was originally projected after the company beat targets for investor returns.

Morgan Stanley’s stock has increased 165% in three years, and has outperformed the S&P 500. Gorman told the Australian Financial Review some of the lessons he has learned heading up one of the major forces in the financial world.

For one thing, even though he is a CEO, Gorman thinks management is more likely to do harm than good to a bank. “A laser focus on the quality of management is crucial, ” Gorman said, according to the Australian Financial Review. They key is not strong personalities, but strong values, discipline and control-oriented focus.

In addition, a CEO needs to recognize that catastrophic risk is faced by all companies, identify where the potential for this risk lies and neutralize it. Gorman added that capitalizing a company’s strengths is crucial, and used the example of Morgan Stanley making smart acquisitions, such as Citigroup’s wealth management business, during the financial crisis. In addition, company culture is important; everyone working for a company needs sufficient ego to avoid being an automaton, but should be a devoted team player who can add a unique perspective to the running of a business.

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