NEW YORK: John Mack’s 2006 pay package for his work as Morgan Stanley’s CEO totaled $41.4 million (Rs183 crore), according to a filing by America’s No. 2 investment house on 23 February.
Mack, who was swept back into power at the second-largest US investment house in 2005, received a base salary of $800,000 in 2006. He was not given a cash bonus, like many of his counterparts on Wall Street, but was compensated through the award of restricted stock and options based on the company’s performance.
He received $36.2 million in restricted stock units each valued at about $78.34 — the volume weighted average price of Morgan Stanley Inc. common stock on the 12 December grant date. He also was awarded $4 million in stock options, valued at about $22.46 apiece.
In addition, his retirement benefits allotted for the year included $68,000 in incremental defined benefit pension and $6,100 for his 401(k) program matched by the company.
Also during the year, Mack was given $321,848 toward use of the company’s aircraft. He also received $15,447 in “other compensation” that was not broken out.
Mack, 62, led the company to $7.45 billion of profit in 2006, a 51% increase from the year-ago period. He has been credited as reengineering the investment bank since returning, and this year will lead it through a spin off of its Discover credit-card unit.
The board has been pleased with his actions after taking the helm from former CEO Philip Purcell. The sagging stock price under Purcell was the instrument of his ouster, and so far Mack has been able to spring it back to life.
Since joining Morgan Stanley in June 2005, shares in the company have risen about 62 percent — with some 40% of that coming in 2006. The stock closed down $1.78, or 2.2%, to $80.97 Friday on the New York Stock Exchange.
Mack’s payday comes two days after rival Goldman Sachs Group Inc. disclosed Chief Executive Lloyd Blankfein raked in $54.3 million in compensation last year. Goldman co-presidents Gary Cohn and Jon Winkelried each were given a pay package worth about $53 million.
The big pay days come as Wall Street’s five biggest investment banks: Goldman, Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc., and Bear Stearns Cos. have turned in record profits during the past year.
Robust trading thanks to a four-year run in the stock market, coupled with a boom in acquisition activity, has allowed the firms to dole out big bonuses across the board.
It wasn’t just the top CEOs getting double-digit bonuses. Top lieutenants at the banks were also given hefty compensation packages. At Morgan Stanley, co-Presidents’ Zoe Cruz and Robert W. Scully were paid handsomely.
Cruz received about $30 million in 2006, including $500,000 in salary and a $10.3 million cash bonus. The package also included $17.3 million of restricted stock awards, and $1.9 million of stock options. About $47,000 was given as part of the 401(k) and pension plan.
Scully received about $20 million in compensation, including a $250,000 salary and $6.9 million cash bonus. He was also awarded $11.6 million in restricted stock and $1.3 million of stock options. He also received $93,144 in matched 401(k) funds.