Marginal Happiness

Wednesday, July 13, 2005

Cookie Jar

I'm disappointed how Morgan Stanley's (MWD) Purcell saga ended. Severance pay for Stephen Crawford ($32 million), Philip Purcell ($113 million package), and David Sidwell ($10.5 million) will total $155.5 million. Sidwell hasn't left yet, but he's still guaranteed $10.5 million thru October '05. This relies on the NY Times estimate for Purcell's other little perks like the charity fund and vested options.

Dude, that's $155.5 million.

According to Reuters, MWD has
1,090 million diluted shares outstanding. So, that's $155.5/1,090 shares = $0.14 /share. Compare that to the declared 1Q05 $0.27 dividend.

Paying off the execs
amounts to 52% of the 1Q05 dividend. But wait, what if Purcell and his gang were mightily effective during their tenure? A glance at the chart shows the nearest competitors by market cap, Merrill Lynch and Goldman Sachs, consistently outperforming Morgan Stanley on a per share basis. But to be fair, lets examine return on equity.

MWD MER GS
15.5 14.4 18.0 ROE(ttm)

The picture improves slightly here. But, if Purcell had pulled this off in Washington Heights, it would be called looting.





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