Morgan Stanley (MS) Chief Executive John Mack has decided to forgo his year-end bonus, citing the billions of dollars in taxpayer aid that the Wall Street firm accepted little more than a year ago. (Morgan Stanley received $10 billion in TARP funds which it repaid in July.)
“Given this unprecedented environment and the extraordinary financial support governments provided to our industry, as the leader of this Firm, I recommended to the Compensation Committee of the Board last week that I receive no year-end bonus,” Mack wrote in a memo to employees.
While Mack did not directly cite the public outrage over Wall Street bonuses as a reason for his decision, he certainly, through his actions, seems to understand Main Streets’ main indignation with Wall Street’s tendency to have its losses socialized while its profits are privatized. Wall Street bonuses by the way, are expected to rise about 40% in 2009.
This is the third consecutive year that Mack, who will be succeeded as Morgan’s chief executive by James Gorman on Jan. 1, but remain chairman, will forgo a bonus. He last received compensation in 2006, when he was given restricted shares that at the time were worth about $36.2 million.
In the memo, Mack also discussed the need for more regulatory reform. “We still need a risk regulator with the tools and authority to ensure risk-taking never again jeopardizes the entire financial system,” he wrote.