Macquarie Paid CEO Allan Moss $33 Million, Is He Worth It?

To be honest, we don't care how much Alan Moss, chief executive officer at Macquarie Bank (ASX: MBL) earns.  Is it really any skin off of your correspondent's or anyone else's nose if Emperor Moss earns $33 million a year?

Clearly $33 million is more than most people need.  Arguably no-one, however good there are at something is really 'worth' that amount of money.  But what business is it of ours?  Hands up anyone out there who would refuse a bonus payment?

Even if you thought you didn't really deserve the bonus because, well, things just kind of happened around you anyway - as long as you pointed it in the right direction it managed to hit the target most of the time.

From where we are sitting, Emperor Moss has done exactly the same thing, only on a bigger scale.  Some may argue that his army of investment bankers have used the scatter-gun approach to growing revenues and profits.  Or to coin the slightly more colourful phrase, "throw enough _ _ _ _, some of it will stick!"

But of course some of it hasn't stuck.  Instead it has just left a bit of a smell.  The London Stock Exchange attempted acquisition of last year and more recently the Qantas debacle, both left the bank with a more than tarnished image.

Besides, Moss's income is still much lower than many of the US company executives, and shock-horror, much less than sports stars such as Michael Schumacher and Tiger Woods.

If Macquarie Bank shareholders are happy enough to be paying him that amount of salary then that is up to them.  Afterall, from a shareholders perspective, they will be judging his performance based on the performance of the shares.  If the bank continues to see strong growth then we would imagine that most shareholders will be happy to continue forking out the high salaries.

Perhaps the senior executives are merely making hay while the sun shines.  They would know that if/when the good times end for Macquarie Bank then they will also end for the executives.

Staying on the same subject (and apologies for our laziness in not checking fully) we seem to recall that it was also within the last couple of years, at the same time that the CEO's salary was announced, that Macquarie Bank issued new shares.

The bank's shares were suspended from trading as they went through the process of issuing 8.6 million new shares at $87 per share.  This was at a discount to the previously traded price of $89.50.

One may have been forgiven for thinking that a dilution of shares in the company may have had a negative effect on the share price.  Not likely!  Thanks to the increased profit results, Macquarie shares opened for trade higher after the trading halt was lifted, giving a quick stagging opportunity for those that were able to participate.

According to Reuters, the last time Macquarie had a capital raising was in May 2006 when they sold $700 million worth of new shares in order to beef up their tier 1 capital.

Kris Sayce
for The Daily Reckoning Australia

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