Morgan Stanley · NYSE:MS
Morgan Stanley — Proxy Contest (April 2024)
30 slides from Morgan Stanley's proxy contest presentation, Apr 5, 2024
Slide 1: Morgan Stanley Compensation & Governance Practices
Morgan Stanley Compensation & Governance Practices April 2024
Slide 2: Board Recommends Shareholders Vote FOR/AGAINST
Morgan Stanley’s Board of Directors Recommends Shareholders Vote: FOR: Four Management Proposals AGAINST: Three Shareholder Proposals •1 Approve the compensation of Named Executive 1• Report on Risks of Political De-Banking Officers (Say on Pay Non-Binding Advisory Vote) 2• Transparency in Lobbying
Slide 3: Approve the Compensation of Named Executive Officers (Say on Pay)
Approve the Compensation of Named Executive Officers (Say on Pay Non-Binding Advisory Vote) The CMDS Committee(1) assessed Mr. Gorman’s performance as outstanding, including setting the Firm up for success through: • Visionary leadership and strong execution of strategy that transformed the Firm int
Slide 4: Morgan Stanley: 15 Years of Transformation
Morgan Stanley: 15 Years of Transformation (1) (2) (1) (2) (1) 2009–2014 2015–2019 2020–2022 2023 48% % % 50% 51% 58% Revenue $31Bn $38Bn $54Bn $54Bn Mix 52% 50% 49% 42% 4 39% % 47% % 62% 43% % Profitability $6Bn $10Bn $16Bn $12Bn Mix (3) 61% 53% 57% 38% IInstitutional tit ti lSSecurities iti Wealth
Slide 5: Resilient and Balanced Business Model Across Businesses
Resilient and Balanced Business Model Across Businesses WM & IM ISG Strategy for Leading Wallet Share >$6 Trillion in Total Client Assets #1 Industry Leader (2) Across the Integrated Investment Bank(4) Client Assets ($Tn) (1) Net Revenue ($Bn) (3) 6.6 32 3.5x 2.1x ~20% Equity 20 Investment ~15% 2.8
Slide 6: CEO Performance and Long-Term Vision
CEO Performance and Long-Term Vision Tenure as CEO and 2023 Performance 2010–2014 2015–2022 2023+ Business stabilization and Business investments Well-positioned for strategy reset and transformation long-term growth 285% ~300% Top 3 $6.6Tn Total Shareholder Return (1) WM & IM PBT Growth ISG Wallet
Slide 7: Delivered Solid Results in 2023 Despite Headwinds
Delivered Solid Results in 2023 Despite Headwinds and Reaffirmed Long-Term Value Proposition (2) 2023 Results Long-Term Goals Client Assets (1) $6.6Tn $10Tn+ WM Pre-Tax Margin 25% 30% Efficiency Ratio 77% 70% ROTCE 13% 20% Against a mixed backdrop, the Firm’s business model performed as intended and
Slide 8: Ongoing Commitment to Dividend and Buyback
Ongoing Commitment to Dividend and Buyback ~4% Dividend Yield (1) and Strong Buyback While Maintaining Excess Capital Continued to Increase Dividend Continued to Reduce Share Count Maintained Excess Capital 4Q Dividend Per Share ($) (2) Shares Outstanding (Bn) (3) CET1 Ratio (%) (5) 2.0 +302MM ~230
Slide 9: Consistently Strong Shareholder Returns Relative to Peers
Continue to Generate Consistently Strong Shareholder Returns Relative to Peers, Despite a Challenging Year (1)(2)(3) (1)(2)(4) 1-Year (2023) TSR 3-Year (2021-2023) TSR 5-Year (2019-2023) TSR (1)(2)(5) Strong Relative Long-Term Performance by MS vs. Peer Average and Market During 2023, Morgan Stanley
Slide 10: Exemplary CEO Succession Process and Leadership Transition
Exemplary CEO Succession Process and Leadership Transition Orderly multi-year succession planning resulted in appointment of outstanding CEO and two strong Co-Presidents • Succession has been a long-standing priority of Mr. Gorman and was planned for many years to ensure an orderly CEO transition •
Slide 11: Staking Awards Support CEO Succession and Leadership Transition
Staking Awards Support CEO Succession and Leadership Transition The CMDS Committee (1) approved a staking award for the new CEO and Co-Presidents. The award was designed to be responsive to shareholders’ concerns regarding loss of critical leadership talent during a transition Shareholder Key Object
Slide 12: Intentional Succession Planning and Career Development
Intentional Succession Planning and Career Development Succession planning extends to executive officers and beyond to ensure a deep bench of capable talent • The goal of succession planning deeper into the organization is to ensure that the Firm has a bench of well-rounded and capable talent. Caree
Slide 13: Long Tenured Leadership Team Committed to Strategic Objectives
Long Tenured Leadership Team Committed to Strategic Objectives and Enhancing Shareholder Value The long-tenured bench of leaders goes beyond the executive officers, which fosters a culture of collaboration James Gorman, Executive Chairman Ted Pick, Chief Executive Officer Andy Saperstein, Co-Preside
Slide 14: Framework for Determining CEO Compensation
Framework for Determining CEO Compensation Mr. Gorman’s total compensation was set at $37 million for 2023, following a robust compensation decision process that supports and reinforces the Firm’s pay for performance philosophy Set Financial and Assess Performance Against Non-Financial Establish Tar
Slide 15: CEO Compensation Components and Program Features
CEO Compensation Components and Program Features Morgan Stanley’s compensation programs, including for the CEO, reflect our pay for performance philosophy. The Firm is committed to responsible compensation programs with the following key features, all of which support the Firm’s culture and values a
Slide 16: Committed to Maintaining Best in Class Governance
Committed to Maintaining Best in Class Governance Key Corporate Governance Practices Robust Annual Shareholder Rights and Committed to Value and Respond to Board Oversight Board Evaluation Accountability Sustainability Shareholder Feedback • The Firm’s strategy, • One-on-one interviews • Adopted pro
Slide 17: Board of Directors Has Relevant and Diverse Experience
Board of Directors Has Relevant and Diverse Experience Board Tenure Balance Board Independence Average Tenure: 6 years All members of all committees are non-management, and the Board benefits from an engaged Independent Lead Director (1) with 10 years + expansive responsibilities 4 Management 2 5-10
Slide 18: Independent Board Leadership and Board Refreshment
Independent Board Leadership and Board Refreshment(1) Megan Butler (59) Hironori Kamezawa (62) Dennis M. Nally (71) Director Nominee Tenure: 3 Years CMDS Chair • Former Executive Director at the U.K. • Currently President and Group CEO of Tenure: 8 Years Prudential Regulation Authority and the U.K.
Slide 19: Approve Non-U.S. Nonqualified Employee Stock Purchase Plan
Approve Non-U.S. Nonqualified Employee Stock Purchase Plan • Morgan Stanley has an employee stock purchase plan that is qualified under Section 423 of the Internal Revenue Code (Qualified ESPP) for employees of eligible U.S. subsidiaries, which was approved by shareholders in 1994 • Due to tax, admi
Slide 20: Vote AGAINST the Following Shareholder Proposals (1 of 2)
Our Board Recommends Shareholders Vote AGAINST the Following Shareholder Proposals: (1 of 2) • Report on Risks of Politicized De-Banking - Ridgeline Research LLC, on behalf of American Conservative Values ETF – The proposal requests that Morgan Stanley issue a report evaluating the Firm’s oversight
Slide 21: Vote AGAINST the Following Shareholder Proposals (2 of 2)
Our Board Recommends Shareholders Vote AGAINST the Following Shareholder Proposals: (2 of 2) • Clean Energy Supply Financing Ratio – New York City Comptroller, on behalf of New York City Retirement Systems – The proposal requests that we annually disclose ratio of our total financing in low-carbon e
Slide 22: Appendix
Morgan Stanley Appendix
Slide 23: Morgan Stanley Has a Clear Climate Strategy
Morgan Stanley Has a Clear Climate Strategy Morgan Stanley’s public commitments to a low-carbon economy are supported by robust governance and transparent disclosures Public Climate Commitments Governance and Disclosure • Achieve “Net-Zero Financed Emissions” by 2050 • Our Board oversees climate cha
Slide 24: End Notes
End Notes These notes refer to the financial metrics and/or defined terms presented on Slide 3 1. CMDS Committee is the Compensation, Management, Development, and Succession Committee of the Morgan Stanley Board of Directors. 2. Return on average tangible common equity (‘ROTCE’) metrics are based on
Slide 25: End Notes
End Notes These notes refer to the financial metrics and/or defined terms presented on Slide 4 a) DVA represents the change in fair value resulting from fluctuations in our debt credit spreads and other credit factors related to borrowings and other liabilities carried under the fair value option. I
Slide 26: End Notes
End Notes These notes refer to the financial metrics and/or defined terms presented on Slide 5 3. Net revenues for 2010 have been adjusted to exclude the positive impact of Debt Valuation Adjustment ('DVA’) of approximately $3 million. The adjusted net revenues are a non-GAAP financial measure that
Slide 27: End Notes
End Notes These notes refer to the financial metrics and/or defined terms presented on Slide 7 1. Client Assets represent reported WM client assets and IM assets under management (‘AUM’). WM client assets represent those assets for which WM is providing services including financial advisorဨled broke
Slide 28: End Notes
End Notes These notes refer to the financial metrics and/or defined terms presented on Slide 11 1. CMDS Committee is the Compensation, Management, Development, and Succession Committee of the Morgan Stanley Board of Directors. These notes refer to the financial metrics and/or defined terms presented
Slide 29: End Notes
End Notes These notes refer to the financial metrics and/or defined terms presented on Slide 18 1. Director ages and tenures are as of the annual meeting date. For a detailed description of each director’s professional experience and qualifications, skills and attributes, see “Director Nominees” of
Slide 30: Notice
Notice The information provided herein includes certain non-GAAP financial measures. The definition of such measures and/or the reconciliation of such measures to the comparable U.S. GAAP figures are included in this presentation, or in Morgan Stanley's (the ‘Firm’) Annual Report on Form 10-K, Defin