Bloomberg.com: U.S.: "Morgan Stanley Chairman and Chief Executive Officer John Mack said he's changing his employment agreement with the firm and no longer will accept a guarantee of $25 million a year in pay. Mack's pay will be based on the firm's performance, instead of being pegged to the compensation received by his four Wall Street counterparts, he said in a letter to employees today. He would have received a minimum of $25 million this year and again in 2006 provided the CEOs of Goldman Sachs Group Inc., Merrill Lynch & Co., Bear Stearns Cos. and Lehman Brothers Holdings Inc. made an average of at least that much.
'I don't want anyone to think that I am entitled to something that others are not,' Mack said in the letter, a copy of which was sent to Bloomberg. 'This is a business built on trust.'
His reversal highlights the pressure Mack is under to rebuild morale and restore Morgan Stanley's reputation after a public battle to oust his predecessor. Morgan Stanley said yesterday that former Chairman and CEO Philip Purcell, 61, will receive a cash retirement bonus of $44 million and co-President Stephen Crawford, 41, can collect $32 million should he resign for any reason by Aug. 4.
Purcell's package has drawn fire from some investors as being too high for someone who presided over a 50 percent decline in the New York-based firm's shares during his last five years in charge.
Mack said certain decisions were made by others at the firm 'in good faith' and he's not going to 'second-guess' them.
'Even if the previous contract seemed technically reasonable, Mack seems to be saying he'll leave it up to the board to reward him as he tries to enhance shareholder value and increase the performance of the business,' said Michael McKeon, head of financial-services consulting at Booz Allen Hamilton Inc. in New York."
Nice move - it reassures all stakeholders that Mack is fair and willing to bet on himself as he obviously is doing. I would bet with him that he will make even more with this "generous and fair" move on his part given how Morgan Stanley compensated CEO failure. Also note Mack certainly accepted his signing bonus as detailed in my post a few days ago. Mack was very wealthy before his return to Morgan and now he's betting house money - and it is good for the firm too.