We urge Morgan Stanley shareholders to vote “Against” director nominees Howard J. Davies, C. Robert Kidder and John J. Mack at Morgan Stanley’s Annual Meeting of Shareholders on April 8, 2008. As members of the Board’s Audit Committee in fall 2005, we believe that directors Davies and Kidder failed to maintain the integrity of Morgan Stanley’s risk management, and thus bear central responsibility for the firm’s $9.4 billion in subprime-related writedowns in 2007.
Those writedowns have led to a 44% decline in Morgan Stanley’s share price that erased $35 billion in shareholder value for the year ending March 7, 2008. Moreover, Morgan Stanley has been forced to raise $5 billion in capital from China Investment Corporation, representing almost 10% of outstanding equity and diluting the investment of existing shareholders.
We believe the circumstances surrounding these risk management failures demonstrate the need for stronger independent leadership at Morgan Stanley. Consistent with best governance practice, we believe John Mack should not serve simultaneously as Chairman and CEO, and are urging shareholders to vote “Against” Mr. Mack to convey that message to the Board.
On January 23, 2008, the CtW Investment Group released letters to members of Morgan Stanley's Audit Committee:
On March 12, 2008, the CtW Investment Group released a letter to Morgan Stanley shareholders urging them to vote against directors Davies, Kidder & Mack:
On March 24, 2008, the CtW Investment Group released another letter to Morgan Stanley shareholders:
Presentations and Other Materials: