Morgan Stanley Shareholders Will Have To Think For Themselves Before Deciding How To Cast Their Purely Symbolic Proxies

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If you're a Morgan Stanley shareholder on the fence about whether to give the bank your non-binding vote in favor of its executive-compensation plan this year, and would like a proxy firm to make your non-decision for you, you are out of luck.

Glass, Lewis & Co. recommended that shareholders vote against the securities firm's executive-pay plan, saying the company was "deficient in linking pay with performance" last year.

In its proxy analysis published ahead of the firm's annual meeting on May 14, Glass Lewis said Morgan Stanley paid its named executive officers more than peers based on a study by executive-compensation firm Equilar….

The firm cited concerns over the structure of Morgan Stanley's compensation program, saying it believes the company has "unchallenging performance targets" and executives receive pay awards "even if the company underperforms peers."

But…

In a competing report, Institutional Shareholder Services Inc. told investors a "yes" vote was warranted for Morgan Stanley's pay because "the CEO pay decrease is aligned with the company's decline in financials."

While ISS recommended approval of the company's compensation plan, the firm said it had "concerns" about a base salary increase for Mr. Gorman to $1.5 million from $800,000. It plans to evaluate that part of the pay further in 2014.

Glass, Lewis and ISS can't even get together on matters more binding.

Separately, while ISS recommended that shareholders vote in favor of 14 director nominees for Morgan Stanley's board, Glass Lewis urged them to vote against James Owens.

The firm said it was concerned about the company's "failure to provide sufficient disclosure regarding transactions with entities affiliated with its directors." Glass Lewis said Mr. Owens, a former CEO of Caterpillar Inc., as chairman of Morgan Stanley's nominating and governance committee "bears the responsibility for ensuring that the company is providing reasonably clear and transparent disclosure to investors."

Magnanimously, Owens' head is the only one Glass, Lewis is seeking—for now.

"At this time, Glass Lewis refrains from recommending to vote against any members of the compensation committee...However, if the company continues to receive a deficient grade in our pay-for-performance model, indicating an ongoing failure to align pay with performance, we will consider holding the committee responsible," Glass Lewis stated in its report.

Morgan Stanley Holders Get Conflicting Advice on Executive-Pay Question [WSJ]

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