Executives feed at the trough
Bank executives are paid well to do a good job. But they should not be rewarded for failure.
Few will dispute that senior executives at banks and corporates deserve to be well paid for their work – assuming that they perform well. But far too many are heaping excess upon excess. We've seen more than enough examples in recent years: The largesse of former GE CEO Jack Welch; the penchant of former Tyco CEO Dennis Kozlowski for exceptionally expensive shower curtains and umbrella stands, among other examples; the staggering pay package for former New York Stock Exchange CEO Richard Grasso.
Despite such scandals, nothing has changed. Morgan Stanley is spending hundreds of millions of dollars compensating executives who are departing for the simple reason, regardless of how much they try to blame a media frenzy, that staff and investors thought ill of their track record. Departing CEO Phillip Purcell is getting more than $100 million, and the bank will even give $250,000 a year to charity for him. His sidekick, Stephen Crawford, was guaranteed $32 million, two years' pay, if he chose to leave by early August. Unsurprisingly, he did.
Compounding the ludicrousness of the affair, Morgan Stanley lead board director Miles Marsh countered that the guarantee was justified. His argument was that Crawford, who has long since been earning at least a seven-figure salary, might not be able to get a new job for a while if he were not part of the new management team under incoming CEO John Mack.