Morgan Stanley Shareholder Meeting Mic-Checked, Protesters Demand Accountability from MultiMillionaire CEO
"Even the trees look rich," a Brooklyn woman told me as we stood outside Morgan Stanley's Westchester, NY, headquarters for its annual shareholder meeting.
The massive investment bank's stock took a tumble on Monday after JP Morgan Chase's $2 billion loss rocked markets, but its CEO was still offering investors a rosy picture Tuesday morning, as what was to have been an extremely perfunctory meeting turned into a question-and-answer session with New York City activists questioning why a bank that got $10 billion from the federal government and $34 million in subsidies from New York City alone is still spending millions on lobbying to deregulate the financial industry, shedding jobs, and dodging taxes.
About 35 activists from organizations including Make the Road NY, La Fuente, Strong for All, 1199 SEIU, New York Communities for Change and United NY were scattered throughout the half-empty auditorium, holding proxies or proof that they'd purchased shares of Morgan Stanley in order to be there. [Full disclosure: I traveled to the meeting with several activists from several of these groups and also purchased a share of Morgan Stanley to get in.] We'd made our way through airport-style security, getting grilled at the gate over our ID and proof of ownership and then going through a metal detector--one member of the group had to show proof that he had a pacemaker to avoid the metal screener; another, walking with a cane, danced as she was wanded despite her two artificial hips.
In a rich Australian accent (that he'd later cite as proof that Morgan Stanley execs and board members come from "all walks of life"), CEO and Chairman of the Board James Gorman opened the meeting singing the praises of his company, touting its "rebound" from the financial crisis and saying "We are on the right track." He bragged of the company being the first major bank to institute clawbacks for its executives' pay packages (something even now being discussed in the press as JP Morgan flails to find someone to blame for its losses), and said that its eight most senior executives had taken no cash bonus at all last year.
Packets were available touting the company's commitment to "Diversity and Inclusion," but the board and executives were all white except for two Japanese men, and despite the claims that they came from "all walks of life," the only real diversity in the room came from the community groups. The directors were politically connected--Erskine Bowles, he of the famed deficit commission, and Laura Tyson, a former Clinton economic adviser, among them--or well-heeled corporate titans like the vice-chairman of Delta Airlines and the chairman and CEO of Caterpillar. Shareholder activist Dan Apfel asked at one point if the bank would consider appointing directors who really came from different walks of life and what that would look like, a question expertly dodged by Gorman--who noted that if they did choose board members who weren't wealthy executives or powerful politicos, they too would be paid $300,000 or so for 15 meetings a year. (Some of the shareholder activists, I'm sure, would have taken him up on that offer, as at least one of them had seen her home foreclosed on recently and another had to take a leave from school due to medical bills.)
Gorman, whose own pay package (he got over $10 million in 2011) was up for a nonbinding vote as part of the meeting, appeared to be ready to rush to the vote to reelect the board without actually taking proposals from the audience, but shareholder activist Ben Master stood up and asked if they were going to allow discussion before voting. He then led off a rousing round of questions from the audience, asking if shareholders could really trust a board that approved $3 million in lobbying to weaken the Dodd-Frank financial reform bill. "It's pretty obvious why the board members support such policy," he noted. "They get rich off of it."
Monnie Callen, the woman with the two artificial hips, called for the board election to represent "a real change," and Dan Apfel pointed out the academic connections of many of the board members and asked about the bank's connection to sky-high student debt. Michael Kink asked where the jobs the bank promised New York were--rather than hiring, the company's shed over 1,900 full-time equivalent jobs in the city since getting millions in handouts, and is planning up to 5,000 more layoffs. Steve Weingarten pointed out that the company's own description says that its singular objective is to provide capital to grow good jobs and allow everyone to share in prosperity--but it's hardly living up to that promise.
As the shareholders asked questions, Gorman provided skillful non-answers or said that they should save their questions for after the vote, and a burly man with an earpiece circled the room, telling shareholders to put away their cell phones. Gorman did at one point acknowledge that the firm would not exist without bailouts from governments around the world, but seemed to take no responsibility for the bank's role in precipitating the economic crash.
He took offense when Cecelia Adams, a CUNY student to whom I spoke recently at Brooklyn College's protest, called the company's practices "unethical," but a quick perusal of their own SEC filing, available at the meeting, shows the company's been sued repeatedly for "common law fraud", and Greg Fries questioned Gorman about one specific settlement that Morgan Stanley had paid, $102 million to end a Massachusetts investigation into its involvement with subprime lending. Gorman deflected, saying that settlements were part of "the normal course of business practices."
When Gorman appeared to have had enough of being questioned, he moved to the vote, even as someone still stood at a microphone waiting to ask her question. But as one of the other executives began to announce that 99% of shareholders had voted to reelect the board, a mic check rang out in the room. Surprisingly, it was allowed to go on, and no one was escorted out or asked to leave. "Morgan Stanley values profits over people!" the protesters chanted.
But when the mic check was over, 94.8% of shareholders were announced to have voted for the executive compensation package, and all the questions in the world weren't going to change that.
Mimi Pierre Johnson, the woman who'd been cut off by the announcement of the vote, pointed out "This is a perfect example of what companies do. You're hoping that someone doesn't come to your private meeting--I drove all the way here because we don't have anyone vouching for us. So I can tell you lucky people in the front two rows, you have the responsibility to get this company back to creating wealth for everyone. Remember that each time you make a vote."
One longtime shareholder did get up to defend Morgan Stanley, complaining about "political speeches," but then Adams spoke up again from the wheelchair she sat in. "I'd like to reintroduce myself as the future," she said. "I'm sorry for making a political speech, but I'm usually invisible to most of the people in here. I'm not going to assume that anybody has a heart. I'm just here to say that I'm the future, and it will be a cesspool for me to clean up. Me and your children. This is too important to me."
The entire meeting, with all the questions and defensive non-answers, took only a little more than an hour. A CNBC reporter interviewed Ben Master outside about the event, and then everyone departed--some of the activists back to New York City to rally outside Morgan Stanley's Times Square offices in the rain.
Nothing is going to change at Morgan Stanley, of course--those of us who bought shares for the meeting or held proxies don't control nearly enough of the company's stock to actually make our votes count. It'd be nice to think that any of the questions asked of Gorman and the board would have given them pause or a change of heart, but even Adams' impassioned plea to them to remember their children and young people like her seemed not to move them.
Still, her parting words to the executives left me with some hope. "One day you're going to be gone and the world will be mine."