Wall Street making bad habit of weekend wimp-outs
No one likes revealing bad or unsavory news. But lately Wall Street has taken to sneaking out some of its less palatable developments right before the weekend. Such timing may keep to the letter of transparency rules, but hardly the spirit.
Morgan Stanley is the latest culprit. The investment bank chose the eve of this past holiday weekend to dribble out that it was more than doubling the annual base salary of Chairman John Mack to $2 million. The figure keeps with Morgan Stanley’s plan to construct a more balanced pay scheme that relies less on annual bonuses.
Fair enough, but then why put out the news when Americans and Britons alike were departing for the first long weekend of the season? Mack has only been in his new role for five months — surely not long enough to warrant such a bumper pay hike. But banker compensation remains a hot-button issue, just as it was when his new role was announced last September. That’s why the disclosure smacks of an attempt to sweep the salary bump under the carpet.
It’s not the first time this year Morgan Stanley has embraced a holiday weekend with zeal. After markets closed the day before Good Friday, the firm unveiled it was taking a writedown of nearly $1 billion on Revel, its casino investment in Atlantic City. Goldman Sachs has been thankful of Fridays too. In February, it waited until most had gone home for the weekend before informing markets that Chief Executive Lloyd Blankfein was getting a $9 million bonus for last year.
These aren’t the most egregious transgressions. Morgan Stanley had the good grace to report and explain a $10 billion CDO-related loss in 2007 mid-week. And the two firms hardly have an exclusive on the PR strategy: politicians are masters of the weekend wimp-out and companies regularly try to bury bad earnings news when fewer shareholders are watching. But the last thing Wall Street needs is another black mark from enraged and suffering taxpayers and investors.