Morgan Stanley's Mack gives up on bonus

Fri, 18 Dec 2009 19:03:12 +0000

John Mack, Morgan Stanley's outgoing chief executive, will forego a bonus for the third straight year as his bank heads for the first-ever annual loss - a move that reflects Wall Street's fears of fuelling the public backlash over compensation.In a memo to employees, Mr Mack, who is handing over to James Gorman in January while remaining as chairman, said he had recommended to the board that he "receive no year-end bonus".Morgan Stanley has lagged behind its arch-rival Goldman Sachs since both firms became bank holding companies regulated by the Federal Reserve at the height of the crisis last year.Although Morgan Stanley has repaid the $10bn in bail-out funds received last year and has recorded a profit in the last two quarters, analysts polled by Thomson Reuters expect it to suffer a yearly loss in 2009, its first as a public company.Morgan Stanley executives have argued their results have been distorted by accounting losses on movements in the price of the firm's debt.Morgan Stanley's board was prepared to award Mr Mack a bonus for his role in ensuring the bank's survival during the crisis, and its improved performance, a person close to the situation said.But Mr Mack was mindful of the anger at bankers' compensation, and the distraction a bonus might create as he prepared to step aside. As an executive who has managed his public persona carefully, Mr Mack may also have weighed the effects on his legacy.