Morgan Stanley · NYSE:MS
Morgan Stanley — Proxy Contest (May 2017)
38 slides from Morgan Stanley's proxy contest presentation, May 8, 2017
Slide 1: Morgan Stanley Compensation & Governance
Morganstanley Morgan Stanley Compensation & ae
Slide 2: Morgan Stanley's Board of Directors Recommends Shareholders Vote
Morganostanley MORGAN STANLEY'S BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE: * FOR: Six Management Proposals @ Approve the compensation of named executive officers (Say on Pay non-binding advisory vote) — Executive compensation is linked to Firm and individual performance through a multi-faceted
Slide 3: Framework for Determining CEO Compensation
Morganostanley FRAMEWORK FOR DETERMINING CEO COMPENSATION Establish Target Compensation Range Assess Performance Determine Compensation Set Performance Priorities + The Board of Directors * The Compensation, * The CMDS Committee + The CMDS Committee sets annual Management assesses Firm and determine
Slide 4: Establishing Target CEO Compensation Range
Morganostanley ESTABLISHING TARGET CEO COMPENSATION RANGE The CMDS Committee reviews and sets a target CEO compensation range annually. This pay range serves as a guideline when assessing performance and determining final compensation at year end MS CEO Compensation Range and Pay for Performance App
Slide 5: In 2016, Morgan Stanley Made Progress on 2017 Objectives
Morganostanley IN 2016, MORGAN STANLEY MADE PROGRESS ON 2017 OBJECTIVES On Track for $1 Billion in Expense Reduction by 2017 Streamline: $1 Billion Expense Reduction Retained Revenue Footprint, With 25% Headcount Reduction and Reduced Resources Complete Fixed Income Restructuring and Maintain Revenu
Slide 6: Morgan Stanley's 1, 3, and 5-Year Shareholder Returns
Morganostanley MORGAN STANLEY'S 1, 3, AND 5-YEAR SHAREHOLDER RETURNS CONSISTENTLY OUTPERFORM THE S&P 500 FINANCIALS INDEX Morgan Stanley and S&P 500 Financials Index Total Shareholder Returns (TSR) ‘Year (2016) TSR 3-Year (2014-2016) TSR 5-Year (2012-2016) TSR 200% 443% 42% 30% A 36% 23% Morgan S&P
Slide 7: Assessment of CEO and Morgan Stanley Firm Performance
Morganostanley ASSESSMENT OF CEO AND MORGAN STANLEY FIRM PERFORMANCE At year end, the CMDS Committee assessed CEO and Firm performance, discussed that assessment with the Board, and established 2016 compensation - CEO compensation of $22.5MM, up 7% from 2015, MS CEO Compensation Range $28 Million or
Slide 8: 72% of 2016 CEO Compensation Deferred; 39% Linked to Performance
Morganostanley 72% OF 2016 CEO COMPENSATION DEFERRED; 39% OF DEFERRED COMPENSATION LINKED TO FUTURE PERFORMANCE MS 2016 CEO Compensation Elements $ Million ‘% of Deferred % of Total $22.5 Million Performan Key Features of Compensation Program Vested Long-Term ‘+ Significant deferrals of compensation
Slide 9: Overview of EICP Proposal
Morganostanley OVERVIEW OF EICP PROPOSAL ‘* The Board of Directors recommends: = Adding 50 million shares to the EICP Proposal — Extending the term of the EICP for an additional 5 years — Re-approval, for purposes of Section 162(m) of the Internal Revenue Code, of the performance criteria set forth
Slide 10: Other Compensation-Related Management Proposals
Morganostanley OTHER COMPENSATION-RELATED MANAGEMENT PROPOSALS Proposal Rationale Annual Say on Pay Frequency Amendment of DECAP The Board of Directors recommends an annual “Say on Pay” vote ‘The Board of Directors recommends adding 1,000,000 shares to DECAP In 2011, the Firm's shareholders indicate
Slide 11: Morgan Stanley's Board of Directors Has Relevant and Diverse Experience
Morganostanley MORGAN STANLEY’S BOARD OF DIRECTORS HAS RELEVANT AND DIVERSE EXPERIENCE The Board continues to recruit directors to bring new skills and perspectives into the Morgan Stanley Boardroom James Gorman * Previously President of Morgan Stanley, President of Chairman and CEO Morgan Stanley W
Slide 12: Committed to Maintaining Best in Class Governance Practices
Morganostanley MORGAN STANLEY IS COMMITTED TO MAINTAINING BEST IN CLASS GOVERNANCE PRACTICES — GOVERNANCE HIGHLIGHTS Board Structure and Independence Board Oversight Shareholder Rights and Accountability Annual Evaluations Sustainability and Social Responsibility + Nine new directors since 2012 who
Slide 13: Vote Against Proposal to Exclude Abstention Votes
Morganostanley MORGAN STANLEY'S BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE AGAINST PROPOSAL TO EXCLUDE VOTES TO ABSTAIN FROM SHAREHOLDER PROPOSAL VOTE COUNTS Reasons to Vote “Agaii ¢ We clearly explain our vote counting standards in our proxy statement. Our methodology honors the intent of shar
Slide 14: Vote Against Proposal on Vesting for Government Service
Morganostanley MORGAN STANLEY'S BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE AGAINST PROPOSAL TO ADOPT A POLICY TO PROHIBIT VESTING OF DEFERRED EQUITY AWARDS FOR SENIOR OFFICERS WHO RESIGN TO ENTER GOVERNMENT SERVICE Reasons to Vote “Against” Vesting and payout of deferred compensation when an em
Slide 15: End Notes
Morganostanley 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 2016 is contained in the Management's Discussion and Analysis of F
Slide 16: End Notes (cont.)
Morganostanley END NOTES (CONT.) Page 6 * Total Shareholder Retum represents the change in share price over a period of time plus the dividends paid during such period, expressed as a percentage of the share price at the beginning of such period (defined herein as “TSR") 2 Source for Peer Companies:
Slide 17: End Notes (cont.)
Morganostanley END NOTES (CONT.) Page 12 * As part of his or her formal duties and responsibilities, the Independent Lead Director shall: Preside at all meetings of the Board at which the Chairman is not present; Have the authority to call, and lead, Non- Management Director Sessions and Independent
Slide 18: Notice
Morganostanley 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
Slide 19: Morgan Stanley
Morganstanley
Slide 20: Strategic Update
Morgan Stanley Strategic Update
Slide 21: Notice
Morgan Stanley Notice The information provided herein may include certain non-GAAP financial measures. The reconciliation of such measures to the comparable GAAP figures are included in this presentation, or in Company's Annual Report on Form 10-K, Definitive Proxy Statement, Quarterly Reports on Fo
Slide 22: Mark to Market: 2017 Strategic Objectives
Morgan Stanley Mark to Market: 2017 Strategic Objectives) On Track for $1Bn in Expense Reduction by 2017 4) Streamline: $1Bn Expense Reduction Retained Revenue Footprint, with 25% Headcount Reduction and Reduced Resources Complete Fixed Income Restructuring and Maintain Revenue Footprint ( Achieved
Slide 23: 2016 Performance: Progress Towards 9-11% ROE
Morgan Stanley 2016 Performance: Progress Towards 9 — 11% ROE()2) 2015 Earnings: $5.5Bn = 8.0% ROE) 2016 Avg. CE: $69Bn ROE: 9- 11% 2017 Target
Slide 24: Opportunities for Future Operational Improvements
Morgan Stanley Opportunities for Future Operational Improvements 1) Maintain Expense Discipline and Fully Realize Streamline Savings 2} Press Advantages in Businesses of Traditional Strength (3} Deepen Relationships to Grow Wealth Management G4) Drive Consistent Profit Growth in Investment Managemen
Slide 25: Maintain Expense Discipline and Fully Realize Streamline Savings
Morgan Stanley C1) Maintain Expense Discipline and Fully Realize Streamline Savings Focused on Operating Leverage Firm Revenues, ex-DVA ($Bn)\") 34.5 34.6 Grew PBT by 12% Pre-Tax Profit 79 on Flat Revenues oe 2017 & Beyond ntai Expect Continued ‘Compensation é es Operating Expense 160 ompansation 15
Slide 26: Leading Investment Banking Franchise
Morgan Stanley C2} Leading Investment Banking Franchise Continued Strength in Ad Industry Completed M&A Volumes ($Tn)\") Upside from Normalization of Underwriting Industry Equity Underwriting Volumes ($Tn)?) 8.8% 8.3% os 08 os 08 05 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 IPOs _ ll Other E
Slide 27: Sales & Trading Strategic Priorities
Morgan Stanley C2} Sales & Trading Strategic Priorities SALES & TRADING EQUITIES Maintain #1 Global Revenue One Management Team Grow Wallet Share Leveraging Best of Group Technology Across all Products and Regions Deepen Prime Brokerage Footprint Monetize Relationships in Flow Trading Sharing and Op
Slide 28: Sales & Trading Positioned for Market Opportunities
Morgan Stanley C2} Sales & Trading Positioned for Market Opportunities Monetizing Strength Across Equities Y¥ #1 Globally 3 Years Running Y Gained Share in 2014, 2015 and 2016 Y Opportunity to Deploy Balance Sheet Profitably Across the Franchise with Strong Retums Y Client Demand for Content, Liquid
Slide 29: Wealth Management Poised to Grow
Morgan Stanley © Wealth Management Poised to Grow 2017 Pre-Tax Margin) Target at 23-25%, Focus on Growing Pre-Tax Earnings Wealth Management Has Achieved Several Critical Milestones Since the JV Merged with 7 Captured aah ree Smith Barney Merger Cost Building Bank ene Franchise To Achieve Infrastruc
Slide 30: Wealth Management: Operating Leverage Persists
Morgan Stanley © Wealth Management Revenue Headwinds Abating Operating Leverage Persists Upside From Increased Retail Engagement Transactional Revenue ($Bn)\") Mute ted Invi - estor Engagement 33 34 2014 2015 2016 Additional Tailwind From Rising Rates Net Interest Income ($Bn) Continued Expense Leve
Slide 31: Digital Tools Enhance Client Experience & Capabilities
Morgan Stanley © Wealth Management Digital Strategy Digital Tools Enhance Client Experience & Capabilities Attract New Customer Base Modernize Branch System & FA Operations + Modernized Branch System with digital self-service to drive FA efficiency Being Built Through a Network of Drive Client Engag
Slide 32: Consistent Margin Improvement Since the Acquisition of Smith Barney
Morgan Stanley © summary Margin Expansion and Growth Opportunities Consistent Margin Improvement Since the Acquisition of Smith Barney Pre-Tax Margin (%)"12) 2014 2015 Target: 2017 2018 2019 1 1 1 1 1 1 1 1 1 1 1 ‘ Y 1 1 Additional Drivers 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Key Drivers Merger swieraes Re
Slide 33: Investment Management Enters Period of Stability and Growth
Morgan Stanley 4} Investment Management Enters Period of Stability and Growth Balanced Business M Strategic Focus v Organizational Realignment v Rationalized Cost Base v Legacy Third Party Fund LP Positions Growth Opportui Enhance Distribution Capabilities » US. Intermediary and Asia * Solutions & P
Slide 34: Continue To Return Capital To Shareholders
Morgan Stanley C5} Continue To Return Capital To Shareholders Capital Sufficiency. ipporting Growth in Capital Return Average Common Equity, ex-DVA ($Bn)\") Total Capital Return ($Bn) 66 48 32 16 2010 2012 2014 2016 2012 2013 2014 2015 I Common Dividends Buybacks
Slide 35: End Notes
Morgan Stanley End Notes ‘These notes refer tothe financial metrics presented on Slide 3. Represents progress during the current calendar year against the 2017 Strategic Objectives established at the beginning of 2016, Pre-tax margin is a non-GAAP financial measure that the Company considers useful
Slide 36: End Notes
Morgan Stanley End Notes ‘These notes refer tothe financial metrics presented on Slide 9. 1. Total Wallet represents the aggregated reported net revenues for the folowing peers: Goldman Sachs, JP Morgan, Bank of America, Citigroup, UBS, Deutsche Bank, Credit Suisse, and Barclays. Morgan Stanley's wa
Slide 37: End Notes
Morgan Stanley End Notes ‘These notes refer tothe financial metrics presented on Slide 11. 4. Transactional revenues include investment banking, trading, and commissions and fee revenues. 2. Compensation ratio is calculated as compensation and benefits expense as a percentage of Net Revenues. ‘These
Slide 38: Strategic Update
Morgan Stanley Strategic Update