In a move that grabbed the attention of Wall Street, Morgan Stanley reportedly granted special bonuses worth a staggering $20 million each to the three contenders vying for the position of CEO, including the newly anointed successor, Ted Pick. The announcement came on Friday in a Securities and Exchange Commission filing, just a day after the 54-year-old Pick was officially named the next in line for the top leadership role.

The share-based awards signify a significant development in Morgan Stanley's succession plan as the retirement of outgoing CEO James Gorman approaches in May 2024. Alongside Pick, Andy Saperstein, who heads the company's wealth management and global marketing divisions, and Dan Simkowitz, the head of investment management, were also considered for the coveted role. Despite missing out on the CEO position, both Saperstein and Simkowitz opted to remain with the bank.

As a result, Saperstein was entrusted with overseeing the firm's asset-management business in addition to his current role as co-president. Simkowitz, known as "Simko" among colleagues, took on the position of co-president alongside Saperstein, filling the void left by Pick's promotion. This strategic reshuffling within the higher echelons of the company aims to ensure smooth leadership transition and continuity.

According to the filing, the board's succession committee deemed it in the best interest of the company and its shareholders to grant the $20 million bonuses to each of the incoming CEO and co-presidents. The amount represents an average of the executives' annual variable compensation, divided into 60% performance stock units. These stock units will convert to shares in 2027, following a performance period from 2024 to 2026.

"The committee granted the awards in acknowledgment of the board's assessment of the criticality to the continued success of Morgan Stanley of ensuring that each executive continues their outstanding leadership in their new roles," the filing stated.

The generous bonuses are set to complement the already significant salaries of Pick, Saperstein, and Simkowitz. In 2022, Pick reportedly earned a total of $28.2 million, inclusive of a base pay of $1 million, a bonus exceeding $8.6 million, and stock awards amounting to more than $18.4 million. As CEO, Pick is expected to earn substantially more next year.

Saperstein's compensation in 2022 totaled $22.7 million, comprising a base pay of $1 million, a bonus of $7.6 million, and stock awards valued at over $14 million. Simkowitz, on the other hand, earned $20.5 million in 2022, including a base pay of $1 million, a bonus close to $7 million, and stock awards exceeding $12.7 million.

The news of the massive bonuses has caused Morgan Stanley's share price to rise nearly 1%, reaching $70.22 in early trading on Monday. As of now, representatives for Morgan Stanley have not provided any comments on the matter.

With these lavish bonuses in place, Morgan Stanley sets the stage for a new era of leadership, as Pick prepares to assume the CEO position in January 2024. The bank hopes that such incentives will ensure the continued success of the company under the guidance of its incoming chief executive and co-presidents.