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Shareholders urged to vote ‘no’ on Morgan Stanley pay plans

D Minus

May is finally here, and with it comes the annual tradition of shareholders and advisory groups complaining about executive pay. First came Barclays, then Coca-Cola, and now Morgan Stanley. The bank received yet another lousy report card from advisory firm Glass Lewis & Co., which recommended shareholders vote no on Morgan Stanley’s compensation plans.

In giving the bank a “D” letter grade for its executive pay practice, Glass Lewis said Morgan Stanley pays its top brass more than competitors – and has for three straight years under the current regime – despite the fact that it trails other banks when it comes to performance, particularly when looking at the bank’s per-share earnings and return on equity, according to the Wall Street Journal.

Not stopping there, Glass Lewis took the bank to task for failing to properly disclose all the business ties of its board members. The company is advising shareholders to vote against the reelection of board member James Owens, the head of its governance committee.

Strangely enough, the D-grade is actually an improvement for Morgan Stanley, which received an “F” last year. So, things are looking up?

Morgan Stanley responded to the report in a letter to shareholders, noting that Glass Lewis based its analysis on unadjusted data that didn’t take into account the value of the bank’s debt. It also backed Owens.

The non-binding vote on pay will take place on May 13 at Morgan Stanley’s annual meeting. The bank likely has little to worry about. Shareholders approved Morgan Stanley’s pay plans last year despite Glass Lewis’s F-bomb.

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Quote of the Day: “As tapering ends, most likely in October, and the discussion shifts to an impending first rate hike (probably around the time when unemployment is approaching 6% and inflation is ticking higher), we will have to buckle our seatbelts for an inevitably more volatile environment.” – hedge funder Dan Loeb, in his most recent note to clients

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