AFSCME Blasts Morgan Stanley Exec Salary Hikes

June 24, 2009 ( - The American Federation of State, County, and Municipal Employees (AFSCME), whose union pension fund holds about 3% of Morgan Stanley's outstanding shares, has called on the Wall Street investment firm to roll back large salary increases for senior execs and others.

A Wall Street Journal report said AFSCME contended in a letter to Morgan Stanley that the salary trend sends the wrong message by de-emphasizing the connection between an executive’s income and his or her performance.

“We urge you to return base salaries to their previous levels and … reward executives for long-term value creation, not just showing up for work,” wrote Gerald McEntee, international president of AFSCME, in the letter, according to the Journal.

Morgan Stanley revealed in a May 22 Securities and Exchange Commission filing that it had raised five executives’ salaries “to move away from a compensation program focused largely on annual incentive awards” and “raise base salary levels that were below several of Morgan Stanley’s peer companies.” The filing stated that the raises “are not intended to increase total annual compensation for the executive officers,” many of whom did not receive bonuses last year.

Morgan Stanley contended in the filing that the move actually supported calls by compensation experts to link compensation with performance and asserted it had taken other steps to link more of its executives’ pay to the firm’s long-term financial results.

Morgan Stanley is one of 10 financial services firms that won approval this month to repay loans from the Treasury Department’s $700 billion Troubled Asset Relief Program (see  Obama Expected to Appoint Feinberg to Police Executive Pay ).