- The Washington Times - Saturday, March 21, 2009

NEW YORK (AP) - Morgan Stanley Chief Executive John Mack received no raise, bonus or stock options last year, and the bank leader’s total compensation, valued at $1.2 million, sank by more than $40 million compared with 2007, according to a Securities and Exchange Commission filing.

Mack, 64, earned an $800,000 base salary and $435,097 in other compensation, which largely involved personal use of company aircraft. But the CEO told Morgan Stanley’s board that, as of March 10, he will reimburse the company for that.

New York-based Morgan Stanley’s board requires Mack, who also serves as bank chairman, to use the company plane “when traveling by air whenever feasible.”

Mack received no bonus in 2007 and asked that he get none last year too, the company’s proxy statement said. He has served as chairman and chief executive officer since 2005, and his employment agreement requires that his base salary stay above the $775,000 salary of his predecessor.

The Associated Press compensation formula is designed to isolate the value the company’s board placed on the executive’s total compensation package during the last fiscal year. It includes salary, any bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.

The calculations don’t include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements, which reflect the size of the accounting charge taken for the executive’s compensation in the previous fiscal year.

In 2007, Mack was paid a total of $41.7 million, a total that made him No. 8 on the AP list of CEOs. But Mack’s pay was largely tied to his performance in 2006, when he led the bank to a profit of more than $7 billion. The bank’s profit plunged 57 percent the next year, as it absorbed heavy losses in the subprime lending crisis.

Most of Mack’s 2007 compensation came from $40.2 million in stock awards.

The bank said in its latest proxy, which was filed Friday, that all outstanding stock options had no intrinsic value as of Nov. 30. This means they were underwater, meaning no holder would exercise them because they would lose money if they turned around and sold the shares acquired.

The exercise price of each option was greater than $14.75, the closing price of Morgan Stanley’s stock on Nov. 28, the last trading day of its fiscal year.

2008 ended roughly with Morgan Stanley reporting a $2.37 billion loss during its fiscal fourth quarter, due to a range of losses on assets. The bank, which received $10 billion under the government’s Troubled Asset Relief Program, earned $1.59 billion, or $1.45 per share, during fiscal 2008.

Morgan Stanley’s stock shed 70 percent of its value in 2008, as it fell from $53.11 to $16.04. The Standard and Poor’s 500 index, by contrast, fell 38 percent in 2008.

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