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(CNN)   Morgan Stanley CEO refuses $25 million salary. Demands that he only be paid for performance   (money.cnn.com) divider line 142
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16905 clicks; posted to Main » on 09 Jul 2005 at 1:55 PM (9 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2005-07-09 09:56:11 AM
I'm not sure the "hero" tag works - "demands he be paid for performance" is CEO speak for "25mm is not enough"
 
2005-07-09 10:00:37 AM
How much are his stock options worth?
 
2005-07-09 10:10:34 AM
"Overpaid fat-cat takes his company's media campaign on the cheap. News outlets more than happy to give millions of dollars of free air time."
 
2005-07-09 10:56:58 AM

Quite a change from former CEO Phil Purcell's severance package.


$43.9 million
$250,000 salary for life - living expenses
$250,000 donated to charity in his name (to write off entire income)


This was covered on the Big Story with John Gibson on Fox News last night. If I was a shareholder, I'd certainly be pissed.

 
2005-07-09 11:01:07 AM
At least this guy is walking the walk. Too many times we've seen CEOs of underperforming companies take bonuses. At my former company, the now-former CEO took bonuses when the rest of us were under a pay raise freeze.

I'd give this guy a hero tag on principal.
 
2005-07-09 12:08:37 PM
A CEO demanding to be paid based on performance only? Shenagigans, I say! My head asplode from the common-sense shown by this CEO.

Now, if we can stop the golden parachutes given to CEOs who run the company into the ground, the would would be a better place.
 
2005-07-09 12:16:16 PM
SBPG, Dustman

"It is not clear whether Morgan Stanley shareholders should be happy," said Jesse Fried, a law professor at the University of California at Berkeley and executive compensation expert.

"The devil is in the details," Fried added. "Shareholders are better off when CEOs are paid $100 of equity instead of $100 of cash because equity provides better incentives. But Mack may be giving up $100 of cash for equity compensation that is worth much, much more, in which case the additional incentives may come at too high a price."
 
2005-07-09 12:59:08 PM
We don't pay for the performance, we pay you to leave.
 
2005-07-09 01:03:31 PM
John Mack, the new chairman and chief executive officer of Morgan Stanley, told employees Friday he will no longer accept a guaranteed minimum of $25 million a year of pay, and instead will tie his compensation to the investment bank's performance.



As long as he dosen't start laying off people at random to make his quarterly numbers, this sounds like a good idea.

Now, if we can stop the golden parachutes given to CEOs who run the company into the ground, the would would be a better place.

Exactly. If you ever want your blood to boil, consider what happened to Dennis Kozlowski's buddies on the board of directors. They helped him steal alot of money, got a cut of the proceeds then sold him out when he got caught. Their severance packages were rumored to be quite nice...but I suppose Tyco had been thru enough at that point. I just wish those leeches could share cell block space with Dennis for 30 years.
 
2005-07-09 02:00:19 PM
: Morgan Stanley offered minimum wage
 
2005-07-09 02:01:11 PM
All CEOs are evil. Companies should be owned by the government and then the people will be free... Like in North Korea and China.
 
2005-07-09 02:03:02 PM
But if I perform, whoa baby.

Open up those wallets.
 
2005-07-09 02:04:40 PM
Reminds me of this morning's Dilbert.
 
2005-07-09 02:04:41 PM
CEOs getting paid based on performance in some sectors is a huge problem. If the CEO's salary is tied to performance, expect short-term gains that can potentially lead to devestation in the long term. Why let the next guy get all of the credit?
 
2005-07-09 02:04:56 PM
 
2005-07-09 02:05:16 PM
Bodero:

$250,000 salary for life - living expenses
$250,000 donated to charity in his name (to write off entire income)


It's impossible to write off your entire income through charitable contributions. It's limited to 50% of your AGI.
 
2005-07-09 02:08:25 PM
Last year, the four other CEOs averaged about $28.2 million in compensation, regulatory filings show. Cayne's compensation totaled $24.7 million, Paulson's $29.8 million, Fuld's $26.3 million, and O'Neal's $32 million, the filings show.

The median U.S. household salary from 2001 to 2003 was $43,527, according to the U.S. Census Bureau.


I had to repost these figures, because they made my jaw drop. The irony is that these men probably don't know how to use a fax machine, make a hotel reservation, or use a computer.

/bitter administrative assistant
 
2005-07-09 02:09:00 PM
Sounds like something stupid I would do.
 
2005-07-09 02:10:52 PM
AGI = $500,000...donate $250,000 so that he gets to take home all the other $250,000.

that's how that works, i think
 
2005-07-09 02:10:53 PM
Did you see the item about Steven Crawford (current co-President of MS) at the bottom of the page? $16MM/year for two years...but if he leaves in the next 30 days, he gets the whole $32MM? That seems ridiculous.
 
2005-07-09 02:12:48 PM
I guess when youre worth more than $393 gazillion, 25 mil just doesnt seem that impressive. Plus, I wonder what his perks and "french" benefits include... Remember, our President only makes ~$215,000 as "nominal salary".
 
2005-07-09 02:14:21 PM
If he doesn't want it, I'll take it.
 
2005-07-09 02:14:28 PM
I'd take the 25 mill _and_ demand a big phat bonu$ !!

/plus a goodlooking big busted 19 year old "personal assistant"
 
2005-07-09 02:15:42 PM
"As long as he dosen't start laying off people at random to make his quarterly numbers, this sounds like a good idea."

He was known as Mack the Knife at his former employer for being very willing to make job cuts. That being said, at this point, most Investment Banking business is structured around deals that don't last more tan a couple of quarters. Job cuts are often an attractive long term and short term solution.
 
2005-07-09 02:16:13 PM
flucto

"...he will no longer accept a guaranteed minimum of $25 million a year of pay, and instead will tie his compensation to the investment bank's performance."
 
2005-07-09 02:16:51 PM
Meh. When he turns a company around and still only draws $1 a year, let me know. Until then, Steve Jobs pwns his ass.
 
2005-07-09 02:17:10 PM
Do you think that guy ever sings "Return of the Mack" to himself? I dunno, I might if I were him, like on elevator rides.
 
2005-07-09 02:18:13 PM
mlfreeman:

AGI = $500,000...donate $250,000 so that he gets to take home all the other $250,000.

that's how that works, i think


No, then you get taxed on the other $250,000.

/currently studying for tax section of the CPA exam
 
2005-07-09 02:18:15 PM
bcp01scu05

Ahh, thank you for clarifying.
 
2005-07-09 02:19:35 PM
Golden parachutes are different from severance payments-- golden parachutes are payouts made when corporate officers are canned after a change in ownership or control of the corporation, and not when they're booted (often for poor performance) by the existing governing structure of the company. The latter are severance payments.

The primary justification for GP is that it's a form of takeover insurance--- public companies are often raided, and when you take someone over you almost always boot out their top officers. Golden parachutes make this a much more expensive proposition, protecting the company from takeovers. They also help recruit corporate officers with substantial experience, since the income security makes working for even a takeover target a reasonable choice.
 
2005-07-09 02:21:48 PM
After reading this, it makes professional athletes seem like decent people for making their millions - at least we get to see them performing. I have no idea how these douchebag CEO's can justify getting these figures!
 
2005-07-09 02:23:32 PM
Bodero: Ahh, thank you for clarifying.

No problem... at least having to memorize all this shiat is good for something. ;o)
 
2005-07-09 02:23:41 PM
I am in favor of reasonable taxes up to and including the amount that the president makes. For anything above and beyond this the tax rate should start to go up, up, up. And, yes, if I ever make this much money I will not change my opinion. If you are living on $200,000 a year, and whining about the government taking all your money, you should be shot.
 
2005-07-09 02:25:13 PM
This is the same thing Steve Jobs did when returning to Apple in 1998, back when the company was really doing badly and (according to what I read) employee morale was rock-bottom. Seeing the CEO of the company do this is probably a great way to boost everyone's outlook, and in principle, I agree with this move, but...

Make no mistake, people. He's making money. Jobs still only accepts $1 a year for his work at Apple, but his stock has made him more money than most of us can dream of seeing in several lifetimes. On one hand, that's fair as it could become worthless if he does a bad job. On the other hand, that's a total lie as it gives him lots of wiggle room since he can cash in at any point.

I'm not sure whether this guy is a hero or not, but it's certainly a step in the right direction. It would be good to see more of this.
 
2005-07-09 02:25:27 PM
mama's_tasty_foods

You also make a very good point as to why this was done. Great comment.
 
2005-07-09 02:29:25 PM
"demands he be paid for performance"
being paid for preformance is exactly why i got out of the porn business.
 
2005-07-09 02:34:41 PM
Two Points:

(1) This is pretty classy. How many of you are paid for performance? Very few. I'm not -- and if you have an annual salary or hourly wage, you're not either. Sales people and other commissioned folks are paid for performance; the rest of us have the security that this guy (in many ways) is shunning.

(2) CEO's of large companies are generally not overpaid when you look at the circumstances closely. They make multimillion dollar decisions daily; the difference in financial results generated by a "good" CEO vs. a "bad" one can often be measured in hundreds of millions of dollars.

Remember, in a market-based, free society, the question of whether a person is "worth" what he is paid is answered not by assessing his contributions to society, but rather by looking at what value he provides to his boss(es). A "good" CEO making $25 million can be worth every penny to his company's shareholders. A baseball player making $10 million can be worth every penny to the owner of his team if the he generates increased ticket sales, advertising revenue and playoff revenue to make it worthwhile.

This has nothing to do with whether a CEO or baseball player is more valuable or "important" than a teacher or a fireman (the answer is No).
 
2005-07-09 02:36:18 PM
mama's_tasty_foods:

Golden parachutes are different from severance payments-- golden parachutes are payouts made when corporate officers are canned after a change in ownership or control of the corporation, and not when they're booted (often for poor performance) by the existing governing structure of the company. The latter are severance payments.

The primary justification for GP is that it's a form of takeover insurance--- public companies are often raided, and when you take someone over you almost always boot out their top officers. Golden parachutes make this a much more expensive proposition, protecting the company from takeovers. They also help recruit corporate officers with substantial experience, since the income security makes working for even a takeover target a reasonable choice.


But it was also a reaction to the takeover-happy times of the 80s and 90s, when a leveraged buyout happened just about every week. I'd say it's somewhat of a dated practice, now...

All the terminology involved in buyouts is a lot of fun, though-white knights, suicide pills, golden parachutes, and so on.

pestossimo:

I am in favor of reasonable taxes up to and including the amount that the president makes. For anything above and beyond this the tax rate should start to go up, up, up. And, yes, if I ever make this much money I will not change my opinion. If you are living on $200,000 a year, and whining about the government taking all your money, you should be shot.

We have a progressive tax rate--it goes from 10% to 15% to 25% to 33% to 35% (up to 38% in corporate tax rates). Are you saying you want it to be higher? Otherwise, I don't really understand your point.

inkswamp:

Make no mistake, people. He's making money. Jobs still only accepts $1 a year for his work at Apple, but his stock has made him more money than most of us can dream of seeing in several lifetimes. On one hand, that's fair as it could become worthless if he does a bad job. On the other hand, that's a total lie as it gives him lots of wiggle room since he can cash in at any point.

I'm not sure whether this guy is a hero or not, but it's certainly a step in the right direction. It would be good to see more of this.


The one problem, from an auditor's point of view, is that equity-only compensation creates a conflict of interest between making good numbers and keeping good books. Part of the reason things like Enron happened is that they were under so much pressure to make higher and higher figures (not to disclaim any fault from Arther Anderson, et al), and resorted to cooking the books.
 
2005-07-09 02:38:24 PM
FYI - the President's annual salary is $400,000. It was raised in 2001.
 
2005-07-09 02:42:12 PM
fark that. Why does any company employee--and that's what a CEO is, an employee--need to be paid more than $300,000 a year? Business schools are teeming with graduates who want to be CEO of a Fortune 500 company, and have the skills to do the job. Why do American corporations have to spend tens of millions of dollars to find someone to fill the position? As someone who took a risk and purchased stock in the company, I want to know: Why are they wasting my money? Why does this person who didn't take the same risk I did deserve such a huge reward?

CEOs are highly paid because they've managed to gain too much political control of the Boards that are supposed to their bosses. It's a scandal, really.
 
2005-07-09 02:42:55 PM
For the record, I couldn't agree more with what Farmer_Ted said. Being a former car salesman, I know what it's like to be paid by performance. I must say, I'm happy to get into a segment of the automotive industry which doesn't have that stress (although can be very rewarding). For this gentleman to put himself on the line like this is noble.

Also, large salaries are a perfect result of the capitalist system we have today, and is a good thing. You are paid what you are worth, with the exception of overinflation of worth with unions (which lead to negating effects, such as outsourcing, but I digress).

I also agree with bcp01scu05. Most of those high wage earners deserve every penny of it, or they wouldn't be making it. We are taxed enough in this nation. I don't think giving the government more money is a worthy goal. That just adds to their necessity to spend even more. By contributing less to the government, they are forced to spend less. Win-win situation if you ask me.
 
2005-07-09 02:44:51 PM
The headline reads: "Morgan Stanley CEO refuses $25 million salary. Demands that he only be paid for performance"

That's a LOT of lapdance performances.

/If he's cute, he can do one for me.
 
2005-07-09 02:45:00 PM
Farmer_Ted

This is pretty classy. How many of you are paid for performance? Very few. I'm not -- and if you have an annual salary or hourly wage, you're not either.

Bullshiat. I get paid to perform, plain and simple (and I'm salary). If I don't perform, I get fired. How is that not payment for performance. It's not like I get to sit and just drool all goddamn day. I have to produce tangible results. The difference is that if my hard work brings in a significant amount of new/additional money for the company, I won't see a goddamn dime of it. Ever. If I'm *lucky*, I *might* get a yearly bonus.
 
2005-07-09 02:47:35 PM
stock options can dwarf normal salaries so giving up salary may not be as big a gesture as it may seem.

why dont people complain about actors and sports people making a billion dollars. could ideology have something to do with it?
 
2005-07-09 02:48:09 PM
little big man:

After reading this, it makes professional athletes seem like decent people for making their millions - at least we get to see them performing. I have no idea how these douchebag CEO's can justify getting these figures!


Yes, looking at a company's 10Q's and 10K's and reading some research is clearly such a herculean task that no one could figure out what is going on at a public company. Those byzantine SEC disclosure rules sure make it impossible to figure out what those public companies are up to.

Sarcasm aside, standard practice at investment banks is to take a substantial but not insanely large salary and to base most of your compensation off of the yearly bonus, which is tied to performance. This is a gesture of solidarity with the remaining bankers at MS that he is one of them, not a retail guy like Purcell was. Purcell's big move, the MS - Dean Witter deal, eroded shareholder value and greatly upset a lot of people at MS. The shame is that a good number of the senior bankers at MS had to jump ship to Deutsche Bank before they fixed the real problem by canning Purcell.

Now watch as no one responds to my post, and everyone talks about how CEO's and golden parachutes are bad, and how that moron Jobs is such a great guy.
 
2005-07-09 02:50:39 PM
Groy is right - the higher up you go in an investment bank, the more of your take-home consists of your annual bonus. As the CEO, he is demonstrating that ALL of his take-home should be the annual bonus.
 
2005-07-09 02:50:45 PM
Grapple

That's the great thing about Capitalism. If you don't have annual performance reviews linked to merit pay increases, Christmas bonuses, profit sharing, or stock options, there are plenty of other places to work.
 
2005-07-09 02:51:04 PM
mactheknife

You are correct! Funny, wasnt that just as Bush took office??? (I know, i know.)

/Kudos to you for showing up in your own thread, btw. Feel free to start hacking... now.
 
2005-07-09 02:54:01 PM
Most of those high wage earners deserve every penny of it, or they wouldn't be making it.

Beautiful in its idiocy
 
2005-07-09 02:55:18 PM
2005-07-09 02:54:01 PM Roman Emperor

Some high wage earners out there certainly don't deserve it, but the ones that don't typically don't continue earning those high wages for long.
 
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