AFSCME Employees Pension Plan, Washington, is seeking a meeting with directors of Morgan Stanley about changing its board members over concerns about excessive severance packages to top executives and corporate governance-related issues, said Richard C. Ferlauto, AFSCME director-pension and benefit investment policy.
"Now is the time for the board to re-evaluate its composition and decision-making procedures," Gerald W. McEntee, chairman of the $700 million American Federation of State, County and Municipal Employees plan, wrote in a letter to Miles Marsh, Morgan Stanley lead director and chair of the nominating and governance committee.
The letter notes "the plan has filed a stockholder proposal for the next annual meeting asking that the board require that directors receive a majority vote" to serve.
Morgan Stanley's excessive severance packages "epitomize the problems with corporate compensation," Mr. Ferlauto said in an interview. "Shareholders have very little influence on an entrenched board, set in its ways. Executive compensation is the best barometer on how accountable a board is to its shareholders."
The plan might consider contesting election of members to the board at Morgan Stanley's annual meeting next year, Mr. Ferlauto said, although the letter doesn't mention that.
"We're looking at a range of options if they don't agree to a meeting or respond to our concerns," Mr. Ferlauto said. He said Morgan Stanley officials hadn't responded yet to the letter.
In the letter, Mr. McEntee, wrote, "The recent positions of the board, including its reluctance to replace CEO Philip Purcell, its initial limitations on the search for his replacement, and the structure of the exit packages for top executives, create questions about the ability of the board to faithfully serve the interest of shareholders."
Pension plans in which AFSCME members nationwide participate own 4% of Morgan Stanley stock, the letter notes, including the 13,465 shares the AFSCME plan owns.
A call to Morgan Stanley for comment was directed to Andrea Slattery, spokeswoman, who didn't respond by press time.
