Morgan Stanley · NYSE:MS
Morgan Stanley — Proxy Contest (April 2010)
13 slides from Morgan Stanley's proxy contest presentation, Apr 1, 2010
Slide 1: Morgan Stanley Governance and Compensation Practices
Morgan Stanley Governance and Compensation Practices April 2010 Morgan Stanley
Slide 2: Notice
Notice The information provided herein may include certain non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in the Company's Annual Reports on Form 10-K for the year ended December 31, 2009, which is available on www.morganstanley.com. This
Slide 3: Table of Contents
Table of Contents o Section One: Overview o Section Two: Corporate Governance Highlights o Section Three: Recent Steps to Restructure Compensation o Section Four: Proposed Equity Plan Amendment 3
Slide 4: Overview of Changes to Morgan Stanley Governance and Compensation Practices
Overview of Changes to Morgan Stanley Governance and Compensation Practices o Took further steps to strengthen corporate governance: - Provided shareholders with a "Say on Pay" advisory vote in 2010. - Gave shareholders who own at least 25% of common stock ability to call a special meeting of shareh
Slide 5: Corporate Governance Highlights
Corporate Governance Highlights Morgan Stanley has significantly strengthened its corporate governance in recent years and is committed to maintaining best-in-class governance practices. o Compensation - Provided shareholders with a "Say on Pay" advisory vote in 2010. o Charter Documents - Sharehold
Slide 6: Corporate Governance Highlights (continued)
Corporate Governance Highlights (continued) o Risk Governance - Risk Committee of Board established January 2010. - Seasoned industry veteran, Ken deRegt, hired as Chief Risk Officer in February 2008, and has added nearly 100 people to the risk function since that time. - Chief Risk Officer reports
Slide 7: Fundamental Changes to Compensation Structure
Fundamental Changes to Compensation Structure - Consistent with Regulatory Requirements and Guidance o Substantially increased ratio of deferred comp. - Average deferral for Operating Committee was approx. 75% in 2009 vs. 42% in 2008. - Average deferral for all Managing Directors was approx. 54% in
Slide 8: Additional Steps Taken In Light of Current Environment
Additional Steps Taken In Light of Current Environment o Chairman and former CEO John Mack received no bonus for 2009, given unique operating environment and government support for industry this past year. He also received no bonus for 2007 or 2008. o After receiving no bonus in 2008, CEO James Gorm
Slide 9: 2009 Compensation Ratio Distorted by Impact of DVA
2009 Compensation Ratio Distorted by Impact of DVA o The positive impact of Morgan Stanley's debt-related credit spreads (DVA) significantly affected the Firm's compensation-to-net revenue ratio in 2009, as it reduced net revenue by $5.5 billion.* o James Gorman has publicly said that the Firm's com
Slide 10: Regulatory/Best Practices Requiring Greater Use of Equity
Regulatory/Best Practices Requiring Greater Use of Equity Morgan Stanley compensation programs are closely aligned with the principles set forth by key regulators, public officials and corporate governance experts - particularly with the increased use of deferred compensation and "at risk" equity aw
Slide 11: Key Drivers of Proposed Equity Plan Amendment
Key Drivers of Proposed Equity Plan Amendment Morgan Stanley needs 38 million additional shares in order to maintain an appropriate mix of equity and cash awards in 2010 because: o Morgan Stanley has increased the portion of compensation awarded in deferred equity, consistent with regulatory require
Slide 12: Importance of Equity in Compensation Programs
Importance of Equity in Compensation Programs o Equity awards are delivered in lieu of - not in addition to - cash as part of an employee's year-end compensation, and thus protect the long-term interests of shareholders. - Equity awards foster an ownership culture and help to attract and retain top
Slide 13: Impact on Overhang and Burn Rate
Impact on Overhang and Burn Rate Overhang(1) o Morgan Stanley's overhang for 2009 was 21% based on average number of shares outstanding for the year. As of the Proxy Record Date, our overhang was 15.5%. - This is the lowest overhang at Morgan Stanley in five years. - The Firm's overhang is substanti