Wall St. executives forgo '08 bonuses

NEW YORK - Top executives at Morgan Stanley and Merrill Lynch & Co. will give up their bonuses this year amid the worst financial crisis since the Great Depression.

Morgan Stanley chief executive John Mack and copresidents Walid Chammah and James Gorman won't receive bonuses and the firm plans to tie employees' compensation more closely to long-term performance, Mack, 64, said in an internal memo. Merrill chief executive John Thain, 53, and four deputies also opted yesterday to go without 2008 bonuses, the New York securities firm said in a statement.

Lower revenue and US government investment in the financial industry are forcing Wall Street firms to scale back compensation. Year-end bonuses, which typically account for two-thirds of compensation, are under scrutiny this year after banks and brokers racked up more than $980 billion of write-downs and credit losses, and the United States passed a $700 billion financial rescue plan for the industry.

Merrill, which lost 72 percent of its stock market value this year, agreed to be acquired by Bank of America Corp. in a transaction negotiated the same week that Merrill's smaller rival, Lehman Brothers Holdings Inc., went bankrupt.

Thain told Merrill's directors of his decision at a board meeting yesterday, said the person familiar with the matter. Other executives going without bonuses include president Greg Fleming, chief financial officer Nelson Chai, general counsel Rosemary Berkery, and Robert McCann, head of Merrill's brokerage division, the person said.

Morgan Stanley isn't granting any stock options as part of year-end compensation in 2008, the firm said.