This year, Morgan Stanley Chief Executive Officer John Mack was given the largest bonus ever for a Wall Street firm head. His company gave him $40 million after garnering its best profits yet in their 71-year history. As of December 12, the bonus was presented to Mack in options worth $4 million and $36.2 million in shares. His 2006 bonus was 44% larger than his bonus last year and nearly $2 million more than the total compensation received by Goldman Sachs Group Inc. CEO Henry Paulson in 2005.
Mack’s bonus comes 18 months after he rejoined the firm following the firing of former Morgan Stanley CEO Philip Purcell because of the company’s unimpressive performance. Upon being appointed CEO, Mack promised investors that he would improve the Morgan Stanley’s lowered stock price and increase the company’s profits. Morgan Stanley also gave over $57 million in company bonuses to several other Morgan Stanley executives.
This year, shares of Morgan Stanley have gained 43%, outpacing the 24% advantage of the Amex Securities Broker/Dealer Index. It is the second-biggest securities firm in the United States by market value. Morgan Stanley is also one of 12 financial firms that has been accused of allowing its interests to affect its stock reports. In one case, the investment banking firm agreed to pay a $125 million fine to the SEC-although the firm did not admit any wrongdoing-following accusations by luxury firm LVMH that Morgan Stanley treated Gucci-a Morgan Stanley client-preferentially by giving them favorable coverage.
It is interesting that Morgan Stanley only recently paid a tiny sum, in relation to its revenues, in fines for issuing fraudulent research. Although this research caused many of its clients to lose their savings or retirement assets, Morgan Stanley and other brokerage firms are already making record profits and their stock prices have reached record highs. Now we learn their top executives are being rewarded with huge bonuses. Yet, this does not surprise me because: On Wall Street, crime pays!
At Shepherd Smith Edwards & Kantas LTD LLP, Our attorneys and staff have more than 100 years of collective past experience in securities regulation and/or in the securities industry. We are committed to helping the victims of securities fraud receive compensation for their losses. To set up an appointment for a free consultation, contact Shepherd Smith Edwards & Kantas LTD LLP today.
Morgan Stanley’s Mack Gets Record $40 Million Bonus!, Red Orbit/Bloomberg, December 15, 2006
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