MORGAN STANLEYMS
MORGAN STANLEY Stock Compensation Disclosure
Deferred Compensation Plans and Carried Interest Compensation
Stock-Based Compensation Plans
Certain current and former employees of the Firm, including financial advisors in the Wealth Management segment, participate in the Firm’s stock-based compensation plans. These plans include RSUs, PSUs and an ESPP.
Stock-Based Compensation Expense
| $ in millions | 2025 | 2024 | 2023 | ||||||||
| RSUs | $ | 1,690 | $ | 1,464 | $ | 1,607 | |||||
| PSUs | 225 | 148 | 91 | ||||||||
| ESPP | 11 | 10 | 11 | ||||||||
| Total | $ | 1,926 | $ | 1,622 | $ | 1,709 | |||||
Retirement-eligible awards1 | $ | 267 | $ | 202 | $ | 178 | |||||
1.Total expense includes stock-based compensation anticipated to be awarded in January of the following year that does not contain a future service requirement.
Tax Benefit Related to Stock-Based Compensation Expense
| $ in millions | 2025 | 2024 | 2023 | ||||||||
Tax benefit1 | $ | 413 | $ | 343 | $ | 382 | |||||
1.Excludes income tax consequences related to employee share-based award conversions.
Unrecognized Compensation Cost Related to Stock-Based Awards Granted
| $ in millions | At December 31, 20251 | ||||
| To be recognized in: | |||||
| 2026 | $ | 583 | |||
| 2027 | 248 | ||||
| Thereafter | 45 | ||||
| Total | $ | 876 | |||
1.Amounts do not include forfeitures or 2025 performance year compensation awarded in January 2026 which will begin to be amortized in 2026.
In connection with awards under its stock-based compensation plans, the Firm is authorized to issue shares of common stock held in treasury or newly issued shares.
The Firm generally uses treasury shares, if available, to deliver shares to employees or employee stock trusts and has an ongoing repurchase authorization that includes repurchases in connection with awards under its stock-based compensation plans.
Common Shares Available for Future Awards under Stock-Based Compensation Plans
| in millions | At December 31, 2025 | ||||
| Shares | 136 | ||||
See Note 17 for additional information on the Firm’s Share Repurchase Program.
Restricted Stock Units
RSUs are subject to vesting over time, generally to seven years from the date of award, contingent upon continued employment and subject to restrictions on sale, transfer or assignment until conversion to common stock. All or a portion of an award may be forfeited if employment is terminated before the end of the relevant vesting period or canceled after the relevant vesting period in certain situations. Recipients of RSUs may have voting rights, at the Firm’s discretion, and generally receive dividend equivalents if the awards vest.
Vested and Unvested RSU Activity
| 2025 | ||||||||||||||
Number of RSUs | Weighted Average Award Date Fair Value | |||||||||||||
shares in millions, $ per share | Unvested2 | Vested | Unvested | Vested | ||||||||||
Beginning balance | 27 | 27 | $ | 88.64 | $ | 92.41 | ||||||||
| Awarded | 14 | 3 | 135.72 | 136.10 | ||||||||||
| Conversions to common stock | — | (21) | — | 95.05 | ||||||||||
| Forfeited | (1) | — | 102.79 | 94.84 | ||||||||||
Vested | (16) | 16 | 91.43 | 91.43 | ||||||||||
Ending balance1 | 24 | 25 | $ | 112.60 | $ | 94.25 | ||||||||
| Weighted average award date fair value | ||||||||||||||
| RSUs awarded in 2024 | $ | 85.46 | ||||||||||||
| RSUs awarded in 2023 | $ | 93.55 | ||||||||||||
1.At December 31, 2025, the weighted average remaining term until delivery for the outstanding RSUs was approximately 1.1 years.
2.Unvested RSUs represent awards where recipients have yet to satisfy either the explicit vesting terms or retirement-eligible requirements.
Fair Value of RSU Activity1
| $ in millions | 2025 | 2024 | 2023 | ||||||||
Conversions to common stock | $ | 2,774 | $ | 2,065 | $ | 2,019 | |||||
| Vested | 2,500 | 1,723 | 2,260 | ||||||||
1. Fair value of converted stock is based on the share price at conversion. Fair value of vested stock is based on the share price at the date of vesting.
Performance-Based Stock Units
PSUs vest and convert to shares of common stock only if the Firm satisfies, over a three-year performance period, performance goals that are determined on the award date. The number of PSUs that may vest ranges from 0% to 150% of the target award, based on the Firm’s level of achievement of the specified performance goals. One-half of a PSU award is earned based on the Firm’s average return on tangible common equity (“MS Average ROTCE”) over the performance period. The other half of a PSU award is earned based on the MS Average ROTCE relative to the Return on
Tangible Common Equity of each member of the defined comparison group (“MS Relative ROTCE”). PSUs have vesting, conversion and cancellation provisions that are generally similar to those of RSUs. Dividend equivalents that accrue on these awards are paid in cash when the awards convert. At December 31, 2025, approximately 2.5 million PSUs at target were outstanding.
Fair Value of PSU Awards
| 2025 | 2024 | 2023 | |||||||||
Weighted average price on award date | $ | 136.31 | $ | 83.86 | $ | 85.76 | |||||
Deferred Cash-Based Compensation Plans
DCP generally provide a return to the plan participants based upon the performance of each participant’s referenced investments.
Deferred Cash-Based Compensation Expense
| $ in millions | 2025 | 2024 | 2023 | ||||||||
| Deferred cash-based awards | $ | 950 | $ | 770 | $ | 693 | |||||
| Return on referenced investments | 764 | 672 | 668 | ||||||||
| Total | $ | 1,714 | $ | 1,442 | $ | 1,361 | |||||
Retirement-eligible awards1 | $ | 401 | $ | 287 | $ | 259 | |||||
1.Total expense includes deferred cash-based compensation anticipated to be awarded in January of the following year that does not contain a future service requirement.
Carried Interest Compensation
The Firm generally recognizes compensation expense for any portion of carried interest (both realized and unrealized) that is allocated to employees.
Carried Interest Compensation Expense
| $ in millions | 2025 | 2024 | 2023 | ||||||||
| Expense | $ | 235 | $ | 114 | $ | 44 | |||||
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About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.