While speaking at question and answer session hosted by retired Bank of America CEO Hugh McColl Jr., Morgan Stanley (NYSE: MS) Chairman John Mack said investment banker pay is still too high, but that it is unlikely to change with firms vying to keep their top talent.
The comments came at Queens University, in Charlotte NC, at the McColl Business School, a private graduate school named after the former Bank of America head. About a 1,000 people attended the session where Mack was asked questions on everything from bank bonuses to merger talks with Wachovia back in 2008.
Mack, 65, retired in December as CEO of Morgan Stanley, and though he believes investment bankers’ compensation is too high, he provided examples on why it is not likely to change. Citing an experience at his own firm, Mack shared how a 28-year old Morgan Stanley trader whose unit had earned more than $300 million for the firm, walked after the company offered him $11 million in compensation. The trader ended up signing on with a hedge fund that gave him $25 million payday.
As for Mack, he hasn’t taken a bonus from Morgan Stanley for the past three years. His annual salary in 2009 was $800,000. His successor, CEO James Gorman received a 2009 bonus of $8.6 billion, but it comes in deferred stock bonus that is tied to performance goals.
In regard to the fight to reign in Wall Street compensation, Mack said that an open discussion with top banking executives and regulators should occur in order to hash out something. Mack also said he has told President Obama that banks are not going to cut compensation on their own.
