Mack alters independent directors' pay structure
John Mack, chairman and chief executive of Morgan Stanley, has made changes to the US bank's board and reintroduced share options for non-employee directors.
The bank said in a filing with the US Securities and Exchange Commission that it had revised the scheme "to make the value of non-employee director compensation more transparent and to further enhance the alignment of the interests of the company's non-employee directors with the interests of shareholders".
Directors previously received 4,000 Morgan Stanley shares, worth $250,000 (€180,000), on their appointment and for each year they remained on the board. Under the new scheme, directors will receive an annual equity award worth $250,000, half of which will be made in stock and half in stock units.
Directors will be required to hold the stock units until they retire from the board, when they will be paid in Morgan Stanley shares.
Morgan Stanley stopped giving stock options to its directors in 2004 when the bank was run by Philip Purcell. The number of annual shares they received was doubled to 4,000.
Morgan Stanley's board has been extensively changed since Mack returned to the bank a year ago after a fractious campaign by shareholders and former directors to oust his predecessor. He has overhauled corporate governance, forcing directors to submit to annual elections, and introduced majority voting.
When Mack sat down for his first board meeting last year, seven of the 10 directors had been there when he left in 2001.
Michael Miles, former chairman of Philip Morris, who was a director for 10 years from before the merger between Morgan Stanley and Dean Witter, was the first to go in September.
He was followed by Edward Brennan, former chairman of retailer Sears Roebuck, John Madigan of publishing group Tribune and Miles Marsh, the lead independent director.
A month after his return, Mack appointed new directors, bringing down the average age of the board by five years. Last month, Charles Phillips, president of Oracle, joined, bringing the number of independent directors to 10 out of a total of 12.
