John Mack, chairman and former CEO of Morgan Stanley, says Wall Street overpays its bankers, but that won’t change unless Washington steps in. “I still don’t think the industry gets it,” he said at an event yesterday. “The issue is not structure, it is amount.” But Wall Street has to pay such exorbitant salaries, he said, to avoid losing its best performers.
He cited one trader who, offered $11 million, bolted for a hedge fund to make $25 million. Mack proposes an “open discussion” on compensation attended by the major banks and regulators. “If we don’t do something, the government will do something.” Mack himself hasn’t taken a bonus in three years, earning just his $800,000 salary—but Morgan Stanley paid 62% of its revenue in compensation last year, its highest ratio in more than a decade.