Photo: Patrick McMullan
John Mack thought that by offing co-president Zoe Cruz last month, he himself might be spared the guillotine over Morgan Stanley’s mortgage-related losses. But lo, it is not so easy. It’s dark times out there on Wall Street; the cobblestones are stained with blood. And after Mack’s announcement yesterday that Morgan Stanley would be taking a $9.4 billion write-down, the people are clamoring for a new sacrifice, and the writing is on the wall for John Mack. Also, it’s in the papers.
“He’s a chronic destroyer of value,” Kevin Murphy, a retired Morgan Stanley airline analyst who recently sold his stock, told the Wall Street Journal today. “He’s a nice person, but you put this guy in the corner office and there’s an x factor where he hurts himself.”
“Like the little old lady from Dubuque who closes her eyes and hopes that the bad stuff will go away, Morgan Stanley did the same,” analyst Richard Bove of Punk, Ziegel & Co. told Fortune, adding that this signified a “complete breakdown” in the company’s risk management.
“He can’t have another screw-up,” securities analyst Brad Hintz told the Times
But it is not words that tell us that Mack is in jeopardy so much as cold hard facts. Mack’s diminished paycheck (he’s expected to take home $800,000 this year, down from $40 million last year) is “one of the harshest punishments meted out on Wall Street, short of showing an executive the door,” says the Times, adding, “his paycheck is particularly humiliating since Lloyd C. Blankfein, the chief executive of Goldman Sachs, is likely to receive a $70 million bonus.”
Still, Mack may end up keeping his job. Not just because he sold a 5 percent stake in the company to China, which takes out some of the sting, or because he gave up his bonus this year, but, according to the Journal, because of “a paucity of executive talent on Wall Street with the experience and knowledge to run a large organization.” So basically he’s Morgan Stanley’s version of … Fidel Castro?
