Board Slammed
By Roddy Boyd
New York Post
Thursday, July 14, 2005

In the past two weeks, the investment firm's board doled out exit packages of at least $44 million and $32 million to outgoing CEO Phil Purcell and departing Co-President Stephen Crawford.

The American Federation of State, County, and Municipal Employees, whose pension plans own 4 percent of the Wall Street giant's stock, now is demanding a meeting to make its objections clear.

The union is making its request in a letter today to Miles Marsh, the head of the Morgan board's Compensation, Management Development and Succession Committee, the group that presided over the payouts.

"This is the last strike for shareholders. This board has got to go," said the union's head of Pension & Benefit policy, Rich Ferlauto. "These aren't golden parachutes anymore, they are platinum helicopters."

He said Morgan's board is not just being irresponsible with shareholder money, they are setting a dangerous precedent for the firm as it tries to rebuild after nearly 60 senior bankers and traders left the firm since March.

"How is John Mack going to lure senior people back when they pay people like Stephen Crawford $32 million for three months work? What will they pay people who actually produce a lot of revenue?" said Ferlauto.

He added that the payment was particularly galling given what he called Crawford's "light resume."

A spokesman for Morgan Stanley declined to comment because he said he had not seen the letter.

When news of the pay to Purcell, Crawford and Chief Financial Officer David Sidwell was released on July 7, it created instant controversy.  The firm released a statement that noted the payments helped "ensure management stability."

Ferlauto said he is realistic about what a meeting with Marsh could possibly accomplish.

"Morgan's board is so deeply connected to Purcell," said Ferlauto, and is so protected by what he called a biased election system that the only way these payments can be prevented in the future is to "throw them all out" at the March 2006 shareholder meeting.

AFSCME announced June 29 that it is submitting a shareholder proposal that would allow Morgan directors to be elected on a simple majority shareholder vote.

A recent report by Merrill Lynch brokerage analyst Guy Moszkowski estimated that the payouts could cost the firm six cents per share after taxes.