* Lawsuit says 62 percent compensation ratio was too high
* Complaint names executives including Gorman, Mack
* Morgan Stanley declines to comment (Adds details of lawsuit, background)
NEW YORK, Feb 11 (Reuters) - Two institutional shareholders have sued Morgan Stanley (MS.N), accusing the Wall Street bank of overpaying its employees after having been bailed out by taxpayers.
The complaint, filed Thursday with the New York State Supreme Court in Manhattan, accuses Morgan Stanley and its directors of wasting company assets and breaching its duties to shareholders by setting aside 62 percent of net revenue in compensate employees, a year in which the firm reported an annual loss.
The percentage is higher than the 36 percent rival Goldman Sachs Group Inc (GS.N) set aside for pay in 2009.
Among the defendants are Morgan Stanley Chairman John Mack and Chief Executive James Gorman, who replaced Mack as CEO at the start of the year.
The suit demands that defendants repay the company for breaches of fiduciary duties and that the firm take action to reform its pay practices.
The complaint was filed by the Security Police and Fire Professionals of America Retirement Fund and the Central Laborers’ Pension fund.
Morgan Stanley spokesman Mark Lake declined to comment and said the company had not yet been served with the complaint.
Last week, Gorman vowed to reduce Morgan Stanley’s compensation ratio, which was inflated in 2009 because of the improving value of the firm’s debt and pay stemming from the Morgan Stanley Smith Barney joint venture.
The lawsuit, filed by the law firm Grant & Eisenhofer, also claims that incentive payments made by the company in 2006 and 2007 should be repaid because they were based on financial results that were later proven to have been worthless.
Grant & Eisenhofer also sued Goldman Sachs on behalf of shareholders in December, alleging the firm’s then-impending 2009 bonuses were not based on the hard work of executives, but based on the taxpayer rescue of the financial services industry.
The case is Security Police and Fire Professionals of America Retirement Fund et al v. Mack et al, New York State Supreme Court, New York County, No. 600359/2010. (Reporting by Steve Eder; Editing by Bernard Orr)