Morgan Stanley · NYSE:MS
Morgan Stanley — Shareholder Meeting (April 2019)
20 slides from Morgan Stanley's shareholder meeting presentation, Apr 5, 2019
Slide 1: Morgan Stanley Compensation & Governance Practices
Morgan Stanley Compensation & Governance Practices April 2019
Slide 2: Board of Directors Recommends Shareholders Vote
MORGAN STANLEY’S BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE: • FOR: Three Management Proposals 1 Approve the compensation of named executive officers (Say on Pay non-binding advisory vote) – At the start of 2018, as in prior years, the Compensation, Management Development and Succession (CMDS)
Slide 3: Compensation Objectives
COMPENSATION OBJECTIVES Morgan Stanley has a pay for performance philosophy, and is committed to responsible compensation programs with the following key objectives, all of which support the Firm’s culture and values and shareholders’ interests: Deliver Pay for • Variable annual incentives and perfo
Slide 4: Framework for Determining CEO Compensation
FRAMEWORK FOR DETERMINING CEO COMPENSATION Morgan Stanley has a robust process that supports and reinforces the pay for performance philosophy that incorporates the following key steps: 1 2 3 4 Establish Target Assess Determine Set Performance Priorities Compensation Performance Compensation Range I
Slide 5: Strategic Objectives and Target Compensation Range
STRATEGIC OBJECTIVES AND TARGET COMPENSATION RANGE The Board oversees the establishment of long-term strategic objectives of the Firm. The CMDS Committee establishes a target CEO total compensation range annually to serve as a guideline for pay 1 2018-2019 Strategic Objectives 2 MS CEO Total Compens
Slide 6: Strategic Objectives: Mark to Market
3 STRATEGIC OBJECTIVES: MARK TO MARKET(1) 2018 – 2019 Strategic Objectives 2018 Results 1 Deliver Wealth Mgmt. Pre-Tax Margin(2) ✓ Pre-Tax Margin(2) of 26.2% of 26 – 28% Expand Institutional Securities Penetration 8% net revenue operating growth(3); 2 and Leadership ✓ wallet share expansion across S
Slide 7: Record Performance in 2018: Selected Highlights
3 RECORD PERFORMANCE IN 2018: SELECTED HIGHLIGHTS Revenue $40.1Bn Record Firm Pre-Tax Profit(1) $11.2Bn Record Net Income(2) $8.7Bn Record Investment Banking Revenues $6.1Bn Record Institutional Securities Equity Revenues $9.0Bn #1 Globally(3) Revenues $17.2Bn Record Wealth Pre-Tax Profit(1) $4.5Bn
Slide 8: Strong Returns and Sufficient Capital Support Investment
STRONG RETURNS AND SUFFICIENT CAPITAL SUPPORT 3 INVESTMENT Attractive Capital Return Profile Ability to Invest for Growth Share Repurchases(1) Capital (Calendar Year – $Bn) (End of Period – $Bn) 4.9 Capital Sufficient 3.8 3.5 72 69 69 2016 2017 2018 Return on Equity and Return on Tangible Common Equ
Slide 9: Strong Operating Leverage Aided by Expense Discipline
STRONG OPERATING LEVERAGE – AIDED BY EXPENSE 3 DISCIPLINE, WHILE STILL INVESTING FOR GROWTH Firm Expense Efficiency Ratio(1), ex DVA(2) (%) Pre-Tax Profit(3), ex DVA(2) ($Bn) 12 Pct Pt Change 11.2 114% 84% 5.2 72% 2013 2018 2013 2018 The End Notes are an integral part of this presentation. See slide
Slide 10: Execution of Strategic Objectives Generates Strong Shareholder Return Over Time
EXECUTION OF STRATEGIC OBJECTIVES GENERATES STRONG 3 SHAREHOLDER RETURN OVER TIME 1-Year (2018) TSR(1)(2) 3-Year (2016-2018) TSR(1)(2) 5-Year (2014-2018) TSR(1)(2) 48% 39% 33% 30% (13%) (23%) (29%) (1%) (6%) Avg. Global Morgan S&P 500 Avg. Global Morgan S&P 500 Avg. Global Morgan S&P 500 Peers Stanl
Slide 11: CEO Compensation Determination
4 CEO COMPENSATION DETERMINATION At year end, the CMDS Committee assessed the Firm’s record 2018 performance, substantial progress on 2018 – 2019 Strategic Objectives, and the CEO’s outstanding leadership to determine 2018 CEO compensation MS 2018 CEO Performance Evaluation MS 2018 CEO Compensation
Slide 12: Compensation Program Aligned with Best Practices
4 COMPENSATION PROGRAM IS WELL ALIGNED WITH BEST PRACTICES IN GOVERNANCE, RISK MANAGEMENT, AND REGULATORY PRINCIPLES Key Features of Compensation Program Deferred Incentive • 75% of 2018 CEO incentive compensation is deferred over three years Compensation • Clawbacks cover material adverse outcomes,
Slide 13: Committed to Best in Class Governance Practices
MORGAN STANLEY IS COMMITTED TO MAINTAINING BEST IN CLASS GOVERNANCE PRACTICES – GOVERNANCE HIGHLIGHTS • 5 new directors since 2016; diversity of skills, attributes and perspectives Board Structure • Average tenure ~5 years; 31% female and Independence • Expansive Independent Lead Director role(1) •
Slide 14: Board of Directors Has Relevant and Diverse Experience
BOARD OF DIRECTORS HAS RELEVANT AND DIVERSE EXPERIENCE The Board continues to recruit directors to bring new skills and perspectives into the Boardroom Board Members Select Experience(1) Board Members Select Experience(1) James Gorman • Previously President of MS, President of MS Wealth Dennis M. Na
Slide 15: Board Recommends Vote Against Annual Lobbying Expenses Report
MORGAN STANLEY’S BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE AGAINST PREPARING AN ANNUAL REPORT ON LOBBYING EXPENSES • We are committed to complying with all applicable laws relating to political contributions and lobbying activities, including registration and reporting, and our current public
Slide 16: End Notes
END NOTES The following notes are an integral part of the Firm’s financial and operating performance described in this presentation: General • A detailed analysis of the Firm’s financial and operational performance for 2018 is contained in the Management’s Discussion and Analysis of Financial Condit
Slide 17: End Notes (cont.)
END NOTES (CONT.) Page 6 1. Represents results against the 2018 – 2019 Strategic Objectives established at the beginning of 2018. 2. Pre-Tax Margin represents income (loss) from continuing operations before taxes divided by net revenues. Pre-Tax Margin is a non-GAAP financial measure that the Firm c
Slide 18: End Notes (cont.)
END NOTES (CONT.) 4. Pre-Tax Margin represents Pre-Tax Profit divided by net revenues. Pre-Tax Margin is a non-GAAP financial measure that the Firm considers useful for analysts, investors and other stakeholders to assess operating performance. Page 8 1. Share repurchases represent actual shares re-
Slide 19: End Notes (cont.)
END NOTES (CONT.) Page 11 1. Pursuant to SEC rules, the Summary Compensation Table in the Firm’s proxy statement is required to include for a particular year, only those equity awards granted during the year, rather than awards granted after year end that were awarded for performance in that year. O
Slide 20: Notice
NOTICE The information provided herein may include certain non-GAAP financial measures. The definition of such financial measures and/or the reconciliation of such measures to the comparable GAAP figures are included in the Firm’s Annual Report on Form 10-K for the year ended December 31, 2018, whic