The Pennsylvania State Employees' Retirement System, Harrisburg, issued a letter to Morgan Stanley directors calling on the firm to reform its compensation practices, according to Robert Gentzel, director of communications for the fund. The letter, sent by the $26.8 billion system's chairman, Nicholas J. Maiale, and CIO Peter Gilbert to Morgan Stanley Director Miles L. Marsh, cited the "excessive compensation and severance packages" recently granted to three current and former Morgan Stanley officials: Philip Purcell, former chairman and CEO; Stephen Crawford, former co-president and executive vice president; and David Sidwell, CFO. The letter estimates that the three Morgan Stanley employees could receive potential compensation and severance packages totaling $166 million.
The letter calls for Morgan Stanley to create an executive compensation plan "that holds management accountable for the performance of the company by only rewarding good performance," and "adopt a majority-vote standard for the election of corporate directors."
Mr. Gentzel said the system had not yet received a response from Morgan Stanley. Morgan Stanley spokesman Jim Badenhausen said the company has no comment.
Morgan Stanley manages about $2.75 billion for the system, including $1.1 billion in absolute return hedge fund-of-fund strategies, $829 million in domestic fixed income, $687 million in EAFE equities and $130 million in Asian equities.