Morgan Stanley CEO gets record $40 mn bonus

NEW YORK: Morgan Stanley gave CEO John Mack the biggest bonus for the head of a Wall Street firm, awarding him $40 million as the company headed for the best profit in its 71-year history. Mr Mack, 62, was granted shares valued at $36.2 million as of December 12, and about $4 million in options to buy Morgan Stanley shares, the company said. The firm also granted more than $57 million in bonuses for seven other top executives.

The payout for Mr Mack, 44% more than Morgan Stanley awarded him last year, eclipses the $38.3 million in total compensation Henry Paulson received in 2005 as CEO of Goldman Sachs Group. Shares of Morgan Stanley, the second-biggest US securities firm by market value, are having their best year since 2003 after Mr Mack put the firm on course for record earnings.

“You expect performance to be reflected in the compensation,” said Laura Thatcher, an Atlanta-based partner in charge of the executive-compensation practice at law firm Alston & Bird.

“You’re talking about staggeringly big companies with huge market caps and huge performance.” Shares of Morgan Stanley have gained 40% this year, outpacing the 16% advance by the Dow Jones Industrial Average. The stock closed on Thursday at $79.60, giving the company a market value of $84.2 billion.

Mr Mack, who’s also chairman, received his entire fiscal 2006 bonus in stock and options, Morgan Stanley said in the filing. Last year, he declined the $28 million bonus he was offered because he had worked at Morgan Stanley for only five months. He accepted a pro-rata payout of $11.5 million in stock and also received a $337,534 salary.

Morgan Stanley also reported stock bonuses for the seven other top executive officers in separate filings in the US co-president Zoe Cruz, 51, received $17 million in stock and $1.92 million in options.

Her counterpart, Robert Scully, 56, got $11.4 million in stock and $1.28 million in options. CFO David Sidwell, 53, was paid $7.98 million in stock and $890,291 in options, while chief legal officer Gary Lynch, 56, a former head of enforcement at the US SEC, got $7.04 million in stock and $792,800 in options.

Eileen Murray, 48, head of global operations and technology, chief administrative officer Thomas Nides, 45, and controller Paul Wirth received smaller amounts. The filings made no mention of a maximum bonus for any of the officers other than Mack.

Unlike last year, Morgan Stanley didn’t disclose stock awards to the heads of its business units. Neal Shear, 54, the firm’s co-head of sales and trading, received last year’s largest stock bonus at $16 million. Lehman Brothers, the No 4 US securities firm, earlier this week said CEO Richard Fuld received $10.9 million in stock for 2006.

Mr Mack, who left Morgan Stanley in 2001 when he was president, returned in June 2005 as the board’s choice to revive a firm bruised by a 2-1/2-month battle with dissident shareholders.

Since he joined, Morgan Stanley has fired more than 1,000 underperforming brokers, made acquisitions to bolster the firm’s energy, fixed-income and hedge fund businesses and created new incentives to keep top-producing employees.