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Free Mars!
Location: I dunno, there's white people around me saying "eh" all the time
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CEO refuses 25 million salary
Link
Quote:
Morgan Stanley CEO shuns pay guarantee
Mack says he won't accept assured $25M a year, will tie pay to investment bank's performance.
NEW YORK (Reuters) - John Mack, the new chairman and chief executive officer of Morgan Stanley, told employees Friday he will no longer accept a guaranteed minimum of $25 million a year of pay, and instead will tie his compensation to the investment bank's performance.
Mack announced his decision after he had earlier this week signed a five-year contract that linked his compensation to that received by CEOs of Morgan Stanley's (Research) four big Wall Street rivals.
Under that contract, he would have received a minimum of $25 million in both 2005 and 2006 had Bear Stearns Cos.' (Research) James Cayne, Goldman Sachs Group Inc.' (Research)s Henry Paulson, Lehman Brothers Holdings Inc. (Research)'s Richard Fuld and Merrill Lynch & Co. (Research)'s Stanley O'Neal averaged that much.
"I don't want anyone to think that I am entitled to something that others are not," Mack said in the letter. "That is why I have decided ... that I will amend my employment agreement. No guarantee. No industry benchmark."
Mack, saying he had received questions in the last day about his own compensation, added: "This business is built on trust."
Reuters obtained a copy of the letter. A spokesman for Morgan Stanley confirmed the letter's contents.
Mack, named CEO June 30, is trying to restore morale and improve performance after his predecessor, Philip Purcell, announced his retirement under pressure from shareholders, and amid a wave of defections of senior bankers.
Last year, the four other CEOs averaged about $28.2 million in compensation, regulatory filings show. Cayne's compensation totaled $24.7 million, Paulson's $29.8 million, Fuld's $26.3 million, and O'Neal's $32 million, the filings show.
The median U.S. household salary from 2001 to 2003 was $43,527, according to the U.S. Census Bureau.
"It is not clear whether Morgan Stanley shareholders should be happy," said Jesse Fried, a law professor at the University of California at Berkeley and executive compensation expert.
"The devil is in the details," Fried added. "Shareholders are better off when CEOs are paid $100 of equity instead of $100 of cash because equity provides better incentives. But Mack may be giving up $100 of cash for equity compensation that is worth much, much more, in which case the additional incentives may come at too high a price."
On Thursday, Morgan Stanley said it had awarded Purcell a severance package worth more than $113 million. It also said Stephen Crawford, named co-president in March, would be paid at least $16 million in each of fiscal 2005 and 2006, or receive $32 million if he were to resign within the next 30 days.
In his letter, Mack said he would not second-guess compensation and personnel decisions made by others before he joined the company. Top of page
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Smart man, I've seen too many companies paying CEO and executives millions for poor performance. Almost every single worker in the world is paid based on the work they've done, not based on what they will do.
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Looking out the window, that's an act of war. Staring at my shoes, that's an act of war. Committing an act of war? Oh you better believe that's an act of war
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