Morgan Stanley Chief Executive John Mack is forgoing a year-end bonus for the third straight year, he said in a memo obtained by Reuters.
Mack is the second bank chief executive not to receive a bonus -- Kenneth Lewis, CEO of Bank of America Corp , is not receiving a salary or bonus for 2009. Both Mack and Lewis plan to retire as CEOs at year-end, although Mack will remain chairman of Morgan Stanley.
Mack last received a bonus in 2006, when he was given restricted shares that at the time were worth about $36.2 million.
Wall Street bonuses are broadly expected to rise about 40 percent in 2009, according to recruiting firm Options Group, as trading revenues approach record levels.
Rising bonuses have drawn criticism from politicians and others, who complain that Wall Street's losses seem to be socialized while its profits are privatized.
Mack seemed to acknowledge that criticism in his memo: "Given this unprecedented environment and the extraordinary financial support governments provided to our industry ... I recommended to the Compensation Committee of the Board last week that I receive no year-end bonus," the memo said.
The bank is also continuing to change its methods for determining compensation, including paying sales and trading teams based in part of the risk they took on.
Morgan Stanley has set aside $10.87 billion for compensation and benefits for the first three quarters of 2009, down from $11.97 billion in the same period last year.
That amounts to an average of roughly $175,000 per employee, about a third as much as Goldman Sachs has set aside.
Mack also called for reforms to the financial system including centrally clearing or reporting derivatives positions, and regulators having the authority to wind down a firm that mismanages its risk.
James Gorman takes over as Morgan Stanley's chief executive at the beginning of next year.
CNBC reported that Morgan Stanley's board had wanted to give Mack a bonus.
Mack's announcement that he is forgoing a bonus comes after Goldman Sachs Group Inc said it planned to pay top managers their bonuses in stock rather than cash.