CalPERS Opposes Morgan Stanley CEO Pay Initiative

March 11, 2005 ( - The California Public Employees' Retirement System (CalPERS) announced Wednesday that it was casting its proxy votes against a Morgan Stanley shareholder proposal limiting CEO compensation.

While the giant pension fund has traditionally targeted many companies it has accused of improper compensation programs not aligned with performance, CalPERS argued in a brief Web site announcement that the pending initiative would hurt the company’s efforts to lure top talent.

“CalPERS believes this proposal may impair the company’s ability to attract and retain key executives,” the fund asserted. “Also, the proposal is inconsistent with true pay for performance concepts.”

The shareholder proxy proposal is expected to come from Shareholders Catholic Equity Fund of Milwaukee, Christus Health of Houston, and Dominican Sisters of Oxford, Michigan. The initiative would limit compensation for the company’s chief executive to no more than 100 times the average compensation for non-managerial employees, unless shareholders approve a greater amount.

Morgan Stanley’s board has recommended shareholders vote against the proposal, according to a Reuters report. “This proposal would place our company at a competitive disadvantage by imposing an arbitrary limit on CEO compensation,” the company said in its proxy statement. “By imposing arbitrary constraints on our CEO’s compensation, the proposal would undermine the performance-based nature of our compensation program.”