Nice work if you can get it: Morgan Stanley’s co-president Stephen Crawford, a protégé of ousted CEO Philip Purcell, resigned from his position this morning, walking out with $32 million.
Crawford’s pay package agreement, created June 30 along with Purcell’s $43,956,346 exit deal—twice his 2004 compensation—was disclosed in an SEC filing late last Thursday, angering a lot of Morgan employees and shareholders. Also in the disclosure was the pay agreement for CFO David Sidwell, guaranteeing him $10.5 million for this year and next—that is, as long as he stays on until October of this year.
The rank and file are not pleased. “It’s disgusting. I was livid, as was my entire office,” says one of Morgan’s top producing brokers, who claims he never disliked Purcell and his crew on a personal level—until now. “I generate a lot of revenue for this firm, and I’m a shareholder. It’s criminal for them to get that much money,” he says.
While it isn’t actually criminal, the terms of the packages granted by the board are at odds with tradition. “Nothing about this was usual, from the pay amounts, to the two-year pay period,” says Alan Johnson, a Wall Street compensation expert who runs Johnson Associates. Morgan Stanley did not return a call seeking comment. (According to a report from The New York Times, a company spokesman says the contracts were negotiated to ensure management stability during the CEO search process and transition.)
And the strong reaction of shareholders and employees has resonated with new CEO John Mack, who in response has chosen to forego the lucrative deal he signed the same day the others received theirs. Mack’s agreement guaranteed him at least $25 million for this year and next, pegging his salary to those of his peers in the business world. Instead, according to a report by The Wall Street Journal, Mack has put his compensation in the hands of the board, letting them determine what he deserves based on results.
Mack’s decision has improved his already solid standing among the workforce. “The guy already has more money than God, what’s $10 million or $20 million more? This way he keeps a lot of credibility in the eyes of shareholders,” says one broker.
As for Crawford, not many expected him to stick around. Crawford and new CEO John Mack historically have not seen eye-to-eye, leading many to think he would not be welcome—or his role would be seriously diminished—when Mack returned as chief executive. One broker remarked that Crawford even forecasted the possibility of his own departure in a meeting of top advisors not long before Mack had secured the job.
Crawford was appointed by Purcell to be co-president, along with Zoe Cruz, this past March—just as a group of former Morgan employees began calling for Purcell’s ouster. Both Cruz and Crawford were strong supporters of the ex-CEO during this time. As a result of his departure, Cruz—who did not negotiate a new employment agreement with the board—becomes acting president as of today.
Since the public battle began between the former Morgan bankers, self-titled “Grumpy Old Men,” Morgan Stanley has lost five of 14 members of its executive committee, along with other top talent from its business divisions. Chairman Mack says he will reach out to these folks and try to bring them back. But he’s not likely to miss Crawford.