8-KLeadership Changes

MORGAN STANLEY 8-K Report, Executive Changes (Jan 4, 2013)

Filed January 4, 2013For Securities:MSMS-PKMS-POMS-PQMS-PAMS-PFMS-PIMS-PLMS-PPMS-PEMSTLW

Summary

Morgan Stanley (MS) filed an 8-K on January 3, 2013, to disclose details regarding the departure of its co-President of Institutional Securities Business, Paul J. Taubman, effective December 31, 2012. Mr. Taubman will remain an employee through May 5, 2013, under a separation and release agreement. The agreement outlines the vesting and distribution schedule for Mr. Taubman's deferred 2012 bonus compensation and outstanding deferred cash and equity awards, which will vest on his termination date and be paid in installments through December 15, 2014. It also details provisions for accelerated termination, including continued base remuneration, and his accrued benefit under the Supplemental Executive Retirement and Excess Plan (SEREP), estimated at a present value of $1.7 million. Mr. Taubman has agreed to customary covenants and a general release of claims.

Key Highlights

  • 1Paul J. Taubman, co-President of Institutional Securities Business, retired effective December 31, 2012.
  • 2Mr. Taubman will remain employed by Morgan Stanley through May 5, 2013, under a separation agreement.
  • 3Deferred 2012 bonus compensation and outstanding deferred awards will vest on his termination date and be paid in four installments through December 15, 2014.
  • 4The agreement includes provisions for accelerated termination, ensuring payment of base remuneration until his new employment or May 5, 2013.
  • 5Mr. Taubman will receive his accrued benefit under the Supplemental Executive Retirement and Excess Plan (SEREP), estimated at $1.7 million.
  • 6Mr. Taubman agreed to customary covenants and a general release of claims through November 5, 2013.
  • 7The agreement contains specified cancellation and clawback provisions for deferred compensation and awards.

Frequently Asked Questions

The primary financial disclosure relates to Mr. Taubman's separation agreement. This includes the vesting and distribution of his deferred 2012 bonus compensation and outstanding deferred awards, which will be paid over time through December 2014. Additionally, the company will pay his accrued SEREP benefit, estimated at a present value of $1.7 million. While there's a cost associated with this agreement, it's structured to align with a phased departure and includes clawback provisions.

The deferred compensation and awards will be distributed or converted into Morgan Stanley shares in four equal installments through December 15, 2014. His SEREP benefit will be paid in accordance with the plan's terms.

Yes, Mr. Taubman has agreed to customary covenants and a general release of claims in favor of the Company, which extend through November 5, 2013. The agreement also mentions specified cancellation and clawback provisions on his deferred compensation and awards, which could impact payments if he breaches certain terms or competes.

The $1.7 million represents the estimated present value of the incremental benefit Mr. Taubman will receive under Morgan Stanley's Supplemental Executive Retirement and Excess Plan (SEREP). This calculation is based on his 27 years of service through his anticipated termination date of May 5, 2013, and is determined as if he were eligible for early retirement.