John Mack to decline the USD 25 million pay offer for performance based incentive

John Mack to decline the USD 25 million pay offer for performance based incentive

The newly appointed Chairman and Chief Executive Officer of Morgan Stanley has announced that he is getting his employment agreement changed to not receive a guarantee of $25 million a year in pay. He would be instead basing his pay on the performance of the company. His current salary package was comparable to what the chiefs of the other big four companies in this field receive. These companies are Goldman Sachs Group Inc., Merrill Lynch & Co., Bear Stearns Cos., and Lehman Brothers Holdings Inc.

Mack said in the letter to his employees: “I don’t want anyone to think that I am entitled to something that others are not. This is a business built on trust.” This would boost the morale of the company, as the chief is there to help them prosper and reach greater heights in their field. There is huge pressure on Mack to deliver and rebuild morale and restore Morgan Stanley’s reputation after a public battle to oust his predecessor.

The company is paying a booty to his predecessor former Chairman and CEO Philip Purcell in the form of a cash retirement bonus of $44 million. Even the co-President Stephen Crawford has an offer to receive $32 million should he resign for any reason by Aug 4. This package has been criticized by investors in the company to be too high for someone who has led the company to a 50 percent decline in the price of the shares. However, Mack says that the decisions were taken in good faith and he has no opposition to them.