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Thursday, Aug. 18, 2005 02:58 pm

Corporate ethics lesson

Fired Morgan Stanley top execs left with millions

If you’re a rank-and-file employee and you don’t produce, you’re handed a pink slip. But if you’re a top executive who doesn’t produce, you get a golden handshake.

Wall Street giant Morgan Stanley recently gave us yet another demonstration of this inequity and hypocrisy that goes to the core of modern corporate ethics. In late July, the firm’s acting president announced the firing of a thousand brokers from its retail division, sternly declaring: “We must constantly review the performance of individuals in the retail group and identify those who are not up to our standards.”

Fine. Nothing wrong with accountability. But contrast this businesslike pruning of weak performers on the company’s front lines with the pampering of two weak performers at the top of the corporate hierarchy. Philip Purcell, the firm’s CEO who presided over a 50 percent decline in Morgan Stanley’s stock value in the past five years, was finally dismissed — also in July — for his inadequate performance. But Purcell was not curtly shown the door, as the thousand brokers were — his descent from the top was eased by an exit package that included a bonus, stock payments, cash, pension, health care for life, and other perks worth $113 million!

Then came Stephen Crawford, who had been elevated by Purcell to the lofty rank of co-president of Morgan Stanley — a post he held for only three months. Yet, unlike the rank-and-filers, Crawford’s fall from the heights was cushioned by a soft pile of cash. He walked away with $32 million. A Morgan Stanley board member who helped orchestrate the pampering of Crawford dismissed critics of the sweet deal, saying: “I don’t think that Steve’s compensation is out of the norm.”

Exactly. The ethical norm is now so perverted that the outrageous has become commonplace.

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