Mack’s raise is effective June 1, the New York-based firm said in a regulatory filing yesterday. Mack’s base salary as chairman and chief executive officer had been $800,000, and he has opted to forgo a year-end bonus for the last three years.
Mack, 65, stepped down as CEO at the end of last year, having led the company through its first quarterly loss in 2007 and the financial crisis in 2008. Mack told shareholders at a meeting earlier this month that he would resign as chairman if current CEO James Gorman ever told him he was in the way.
Mack’s raise is “in line with his new role and responsibilities as executive chairman of the company’s Board of Directors,” Morgan Stanley said in the filing. It follows the firm’s strategy “to move away from a compensation program focused largely on annual incentive awards.”
Morgan Stanley last month reported its largest quarterly profit since 2007, as it recovers from the crisis that included a $10 billion bailout from the government in 2008 and the bank’s first annual per-share loss in 2009. Last year, it repaid the taxpayer funds and took a controlling stake in a joint venture with Citigroup Inc.’s Smith Barney brokerage.
Shareholders voted against a proposal earlier this month that would have required the chairman be an independent director who hasn’t previously served as an executive officer of the company.
200 Jobs Cut
Mack said earlier this year that compensation on Wall Street was too high and proposed an “open discussion” between major investment banks and regulators to address the issue. Mack hasn’t taken a cash bonus since he took the helm of the firm in 2005. He received a $40 million stock bonus in 2006.
The firm also cut about 200 jobs in Morgan Stanley Smith Barney brokerage, a person with knowledge of the reductions said yesterday. The cuts were mostly from product support areas and didn’t involve brokers, said the person, who declined to be named because the reductions aren’t public.
The brokerage also plans to hire about 150 private bankers and 35 employees for the unit’s capital markets operations, the person said.