Crawford Out at Morgan Stanley

The co-president's promotion had angered dissidents.
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Another of John Mack's wishes was granted Monday when Stephen Crawford resigned as co-president of

Morgan Stanley



Crawford's departure could open the door for the return of several former ex-Morgan Stanley bankers and traders who left after Crawford was promoted by Philip Purcell, the Wall Street firm's former chairman and CEO.

Crawford won't be leaving Morgan Stanley empty-handed. Last week, the firm disclosed that it had guaranteed Crawford a $32 million compensation package for the next two years. A provision in the agreement permitted Crawford to collect that entire sum if he left Morgan Stanley within a month of signing the pact.

With Crawford gone, Mack named Zoe Cruz as acting president.

It was Purcell's decision to name both Crawford and Cruz as co-presidents that ultimately led to his downfall at Morgan Stanley. The promotions touched off a wave of protests both within and outside the firm.

Two weeks ago, Mack replaced Purcell as chairman and CEO in an attempt by the firm to reach back to its storied past. For Mack, the appointment was a dream come true, given that he was driven out of Morgan Stanley four years ago after losing a power struggle with Purcell.

It's not clear how long Cruz will remain in her job. Mack is said to respect Cruz, but some of the traders and bankers who left the firm are said to oppose her promotion as much as they did Crawford's.

Cruz reportedly turned down a similar guaranteed compensation package that was given to Crawford.

Meanwhile, Mack said last Friday that he will give up a $25 million minimum guaranteed pay package he negotiated with the firm's board. Mack now says his compensation will be based totally on the firm's performance.

The board had agreed to pay Mack a minimum of $25 million annually for the first two years of his five-year contract.

Mack made his decision after an uproar over his rich pay package and the board's decision to give a $44 million retirement "bonus'' to Purcell.