* Gorman faces tough questions from protesters
* Shareholders approve pay and director proposals
* Chants drown out vote tally
By Lauren Tara LaCapra
PURCHASE, N.Y., May 15 Anti-Wall Street
protesters upstaged Morgan Stanley's annual meeting on
Tuesday, lobbing tough questions at Chairman and Chief Executive
James Gorman and shouting negative comments over a bank official
who was attempting to read a tally of shareholder votes.
The 53-year-old CEO kept his cool through the meeting, but
took protesters to task after one accused him and the board of
directors of "immoral" and "unethical" practices. Among
protesters' complaints were the bank's high pay packages, job
cuts and financial reform lobbying efforts.
"I take umbrage at the suggestion that our board did
anything unethical and I can't just let that sit out there,"
He went on to say that although some of Morgan Stanley's
business practices, including mortgage servicing, had been poor
in the past, "I don't regard those as immoral or unethical."
After engaging in debate with some members of the protester
group, which identified itself as "The 99% Spring" and was
similar in tone to the "Occupy Wall Street" movement, Gorman
instructed Corporate Secretary Martin Cohen to announce the
preliminary shareholder vote tally.
But protesters quickly drowned out Cohen by yelling negative
comments about Morgan Stanley and Wall Street.
"We will not be quiet until we create a system that prevents
the 1 percent from ripping off the 99 percent," they chanted in
a call-and-response fashion.
Once the protesters had finished their chant, Cohen
announced that 93.6 percent of shareholders voted for the
election of directors, 94.8 percent of investors approved
proposed compensation for top executives and 81.4 percent
approved a plan to add clawback provisions to bonuses stemming
back to 2007.
There followed a second, lengthier question-and-answer
session between Gorman and shareholders - who were mostly
protesters - that pushed the meeting to over an hour.
After the meeting, which was staffed with security guards
and police, Gorman shook hands with a few more supportive
shareholders and fielded more questions from reporters.
Gorman said that Morgan Stanley does not have positions
similar to the derivatives trades that have caused at least $2
billion in losses for competitor JPMorgan Chase & Co.
Morgan Stanley's corporate treasury desk, which manages the
company's excess liquidity, is "conservative," he said.
Gorman also said he does not believe JPMorgan's trading
losses, which caused negative reactions from rating agencies for
that bank, will affect Moody's Corp's assessment of
Morgan Stanley's rating.
"I don't think JPMorgan has anything to do with how Morgan
Stanley is rated," said Gorman.
Moody's is in the process of assessing downgrades for
several large banks, and has said it might lower Morgan
Stanley's three notches, from "A2" to "Baa2," which is just two
notches above junk. Moody's has an open dialogue with Morgan
Stanley as it gears up for the release of its assessment in
June, Gorman said.
Gorman, who opened the annual meeting by saying he hoped it
would be "respectful and orderly," had been prepared for the
protesters. All considered, he said, "I thought it was pretty
A shareholder who shook hands with Gorman said he was upset
that the event was dominated by protesters' political statements
rather than more traditional shareholder concerns. "I want the
stock to go back to where it was - that's all I want," he said.
Morgan Stanley shares were up 0.3 percent at $14.35 in
afternoon trading on Tuesday. Its shares closed at $14.30 on
Monday, less than half the company's stated book value of $31.42
as of March 31.