Investment banking giant Morgan Stanley (MS) has issued 30 million shares worth $$706 million as employee bonuses under the Morgan Stanley 2007 Equity Incentive Compensation Plan, as amended and restated March 21, 2013. This was revealed by the company in a form S-8 registration statement filed with the U.S. Securities and Exchange Commission on Thursday.
As per the employee equity incentive compensation plan, the employees were issued 30 million shares at $23.52 per share totaling $705.60 million.
The offer price was arrived at based upon the average of the high and low prices reported for the shares of common stock on the NYSE on May 9, 2013.
The company stated in the regulatory filing that stock compensation will prevent dilution that would have resulted from any stock dividend, stock split, recapitalization or other similar
transaction.
The issuance of stock bonuses was approved by shareholders on Tuesday at the company's annual meeting after the board cut Chief Executive James Gorman's pay by seven percent, the second year of annual pay cut in a row.
Gorman's pay cut follows the bank's earlier decision to reduce pay for its staff. Morgan Stanley had also decided in mid-January to defer 2012 bonuses for high-earning employees for as long as three years. The deferral applies to all employees who make more than $350,000 annually and whose bonuses are at least $50,000, except for financial advisers.
The company is said to be preserving capital so as to use any excess funds to increase returns to its shareholders and also to acquire the rest of Morgan Stanley Smith Barney, its wealth-management joint venture with Citigroup, Inc. (C). The company has cut pay, jobs and deferred bonuses to meet their higher capital requirements.
In September 2012, Morgan Stanley reached a deal with Citigroup to assume full control of the joint venture by the mutually agreed deadline of June 1, 2015. This includes Citigroup's remaining 35 percent stake in Smith Barney, including deposits of about $48 billion.
Smith Barney was formerly a division of Citi Global Wealth Management. It was merged with Morgan Stanley's Global Wealth Management Group.
MS closed Thursday's regular trading session at $24.58, down $0.28 or 1.13% on a volume of 18.87 million shares.
For comments and feedback: editorial@rttnews.com