Anyone who has followed the fortunes of Morgan Stanley over the last few weeks and months knows that the departure of the outgoing CEO, John Purcell, occurring as it did under enormous pressure from shareholders and a series of very public defections of several senior managers, left the firm with somewhat of a black eye.

Mr. Mack is, no doubt, fully aware of how even the perception of being damaged goods can affect an investment bank's bottom line. Hence, his acknowledgement that "This business is built on trust" is more than just a statement of fact, it is an indirect way of saying that "we know we have lost the trust of many people in the last several weeks and months and this is a way I am seeking to rebuild it."

Seasoned investors are not likely to be impressed, however, at least not immediately. After all, as Jesse Fried of UC Berkeley Law School points out, "The devil is in the details."

"Shareholders are better off when CEOs are paid $100 of equity instead of $100 of cash because equity provides better incentives. But Mack may be giving up $100 of cash for equity compensation that is worth much, much more, in which case the additional incentives may come at too high a price."

In other words, depending on the structure of Mack's compensation package, giving up $25 Million guaranteed for $0 guaranteed plus options and a bonus tied to performance could result in much more money in his pocket. And should the amount be an ungoldy sum, any morale and confidence boost to employees and investors accruing to the firm from this recent announcement will rapidly evaporate, leaving this incident to be seen as yet one more example of letting the devil take the hindmost.

Linked to: Third World County; Stop the ACLU; Diane's Stuff; Stuck on Stupid; The Political Teen; and California Conservatives.