(Bloomberg) -- Morgan Stanley gave Chairman and Chief Executive Officer James Gorman a compensation package for 2012 that’s 30 percent less than his 2011 award, excluding a new incentive package, a person familiar with the decision said.

Gorman, 54, will get stock options valued at $2.6 million, according to a filing with the U.S. Securities and Exchange Commission. He also will receive a $2.6 million deferred cash bonus in addition to his $800,000 salary, said the person, who asked not to be identified because Gorman’s total pay hasn’t been announced.

Morgan Stanley cut 2012 costs 2 percent as revenue climbed 6.9 percent, excluding charges or gains related to changes in the price of the firm’s own debt. Still, the bank earned just a 5 percent return on equity, below both its cost of capital and Gorman’s goal of 15 percent.

Gorman is receiving options instead of restricted shares he was awarded for 2011. He’s also getting a new long-term incentive package separate from his year-end pay, which will have a similar structure to the performance shares he was awarded for 2010 and 2011, the person said. Even including the new package, his total compensation will be down from the $10.5 million he received for 2011, the person said.

Morgan Stanley shares climbed 26 percent in 2012, after tumbling 44 percent in 2011. The stock has gained about 18 percent this year, fueled by fourth-quarter earnings that exceeded analysts’ estimates and Gorman’s plan to double the firm’s return on equity even without an improvement in markets.

Morgan Stanley is eliminating 1,700 jobs this month as Gorman pursues $1.6 billion of annual savings during the next two years. The New York-based firm is deferring all bonuses for employees who have both total pay of more than $350,000 and incentive compensation of at least $50,000, a person briefed on the matter said earlier this month.

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