Mack and Cruz Sign Revised Morgan Stanley Contracts

John Mack, chairman and chief executive of Morgan Stanley, and Zoe Cruz, acting president, last week set the tone for managing and executive directors at the bank by signing new contracts that extend their notice periods.

The latest agreements increase their notice from one to six months and reaffirm restrictive covenants, including non-solicitation of clients for a further six months, according to filings with the US Securities and Exchange Commission.

The contracts are part of a programme at Morgan Stanley to bring notice periods for senior staff into line with rivals. Executive and managing directors have until this Wednesday to sign the new agreements. If they do not, they will forfeit the stock element of bonuses.

The new agreements cast light on the terms and conditions for senior staff at Morgan Stanley, which has been hit by a year of senior management changes. Executive directors will see their notice period extended from one month to two and subject to a 90-day restrictive covenant, during which time they will not be allowed to solicit former colleagues or clients.

Notice periods for managing directors will be extended to 90 days, with a 90-day restrictive covenant, and members of the management committee must sign up to 180 days' notice with 180 days of restrictions.

Morgan Stanley said the restrictive covenants were standard practice and had not changed.

The latest contracts signed by Mack and Cruz are in sharp contrast to what they had been offered. Mack turned down a guaranteed $25m a year in September and Cruz did not sign the "golden helicopter" contract that promised a huge payout if she decided to leave.

Last week, Morgan Stanley revealed in other filings that it paid $34m to three senior bankers who quit during the campaign to oust ex-chief executive Philip Purcell.