<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MORGAN STANLEY GROUP INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MORGAN STANLEY GROUP INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
MORGAN STANLEY GROUP INC.
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
April 26, 1995
Dear Stockholder:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of Morgan Stanley Group Inc. The meeting will be held on Thursday, June 8, 1995
at 9:30 A.M. at 1251 Avenue of the Americas, 31st Floor, New York, New York. We
hope that you will be able to attend. Enclosed you will find a notice setting
forth the business expected to come before the meeting, the Proxy Statement, a
form of proxy and a copy of the Company's 1994 Annual Report.
Whether or not you plan to attend the meeting in person, your shares should
be represented and voted at the meeting. Accordingly, after reading the
enclosed Proxy Statement, kindly complete, sign, date and promptly return the
proxy in the enclosed self-addressed envelope. No postage is required if it is
mailed in the United States. If you later decide to attend the meeting and wish
to vote your shares personally, you may revoke your proxy at any time before it
is exercised.
Very truly yours,
/s/ Richard B. Fisher
Richard B. Fisher
Chairman
/s/ John J. Mack
John J. Mack
President
<PAGE>
MORGAN STANLEY GROUP INC.
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
----------------
NOTICE OF 1995 ANNUAL MEETING OF STOCKHOLDERS
April 26, 1995
The 1995 Annual Meeting of Stockholders of Morgan Stanley Group Inc. will be
held at 1251 Avenue of the Americas, 31st Floor, New York, New York on
Thursday, June 8, 1995 at 9:30 A.M. for the following purposes:
1. To elect directors.
2. To approve the selection of Ernst & Young LLP as independent auditors.
3. To transact such other business as may properly come before the
meeting.
The record date for the determination of stockholders entitled to vote with
respect to this solicitation is the close of business on April 10, 1995.
By Order of the Board of Directors,
/s/ Jonathan M. Clark
Jonathan M. Clark
General Counsel and Secretary
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Introduction........................................................... 1
Election of Directors.................................................. 3
Board of Directors Meetings, Committees and Fees....................... 5
Stock Ownership of Management.......................................... 6
Principal Stockholders................................................. 7
Stockholders' Agreement................................................ 8
Interest of Management in Certain Transactions......................... 9
Compensation of Executive Officers..................................... 10
Compensation Committee Report on Executive Officer Compensation........ 15
Compensation Committee Interlocks and Insider Participation............ 19
Performance Graph...................................................... 20
Appointment of Independent Auditors.................................... 21
Stockholder Proposals.................................................. 21
Other Matters.......................................................... 21
</TABLE>
<PAGE>
MORGAN STANLEY GROUP INC.
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
----------------
PROXY STATEMENT
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with a solicitation of
proxies by the Board of Directors of Morgan Stanley Group Inc., a Delaware
corporation (together with its consolidated subsidiaries, the "Company", unless
the context indicates otherwise), to be used at the 1995 Annual Meeting of
Stockholders of the Company to be held on Thursday, June 8, 1995 at 9:30 A.M.
and at any adjournments thereof. The approximate date on which this Proxy
Statement and the accompanying form of proxy are first being sent to
stockholders is April 26, 1995.
Holders of the Company's Common Stock, par value $1.00 per share (the "Common
Stock"), as of the close of business on April 10, 1995 will be entitled to vote
at the Annual Meeting. On that date, there were 77,172,357 shares of Common
Stock outstanding (excluding treasury shares), each of which is entitled to one
vote with respect to each matter to be voted on at the meeting. The Company's
transfer books will not be closed. In addition, on April 10, 1995 there were
3,790,786 outstanding shares of the Company's ESOP Convertible Preferred Stock
(the "ESOP Stock"), each of which is entitled to 1.35 votes with respect to
each matter to be voted on at the meeting. The Common Stock and the ESOP Stock
vote together as a single class.
A proxy in the accompanying form that is properly executed, duly returned and
not subsequently revoked will be voted in accordance with instructions
contained thereon. If no instructions are given with respect to the matters to
be acted on, proxies will be voted as follows: for the election of the nominees
for directors named below, for the approval of the selection of Ernst & Young
LLP as independent auditors of the Company and otherwise in accordance with the
judgment of the person or persons voting the proxy on any other matter properly
brought before the meeting.
A stockholder who executes a proxy (other than a proxy granted pursuant to
the Voting Agreements referred to below) may revoke it at any time before it is
exercised by giving written notice to the General Counsel and Secretary of the
Company, by subsequently filing another proxy or by attending the Annual
Meeting and voting in person.
Each proposal presented in this Proxy Statement will be approved if it is
authorized by the affirmative vote of a majority of the combined voting power
of the shares of Common Stock and ESOP Stock represented at the meeting. An
abstention with respect to any proposal will be counted as present for purposes
of determining the existence of a quorum and will have the practical effect of
a negative vote as to that proposal. Brokers (other than the Company's wholly
owned subsidiary, Morgan Stanley & Co. Incorporated ("Morgan Stanley")) that do
not receive instructions are entitled to vote on each proposal presented in
this Proxy Statement. Under the rules of the New York Stock Exchange, Inc. (the
"NYSE"), if Morgan Stanley does not receive instructions it is entitled to vote
such shares only in the same proportion as the shares represented by votes cast
by all record holders with respect to such proposal. In the event of a broker
non-vote with respect to any other proposal coming before the meeting arising
from the absence of authorization by the beneficial owner to vote as to that
proposal if such proposal requires specific authorization, the proxy will be
counted as present for purposes of determining the existence of a quorum but
will not be deemed as present and entitled to vote as to that proposal for
purposes of determining the total number of shares of which a majority is
required for adoption.
Certain stockholders of the Company hold their shares of Common Stock subject
to agreements relating to, among other things, the voting and disposition of
such shares. Such agreements include the Stockholders'
1
<PAGE>
Agreement dated as of February 14, 1986 (the "Stockholders' Agreement") among
the Company and those persons who were stockholders (the "Recapitalization
Signatories") of the Company at the time of a recapitalization effected in
contemplation of the Company's initial public offering (all of whom were
Managing Directors or Principals of Morgan Stanley and employees of the Company
at such time), and various voting agreements (the "Plan Agreements" and,
together with the Stockholders' Agreement, the "Voting Agreements") entered
into between the Company, certain of its employees and/or a trustee for a trust
that holds shares of Common Stock on behalf of such employees (together with
the Recapitalization Signatories, the "Signatories") in connection with the
granting to such employees of stock awards, stock unit awards and/or option
awards under the Company's 1988 Equity Incentive Compensation Plan (the "Equity
Incentive Compensation Plan"), options under the Company's 1986 Stock Option
Plan (the "Stock Option Plan") and performance units under the Company's
Performance Unit Plan (the "Performance Unit Plan"). The shares of Common Stock
subject to the Plan Agreements have been issued pursuant to stock awards or
stock unit awards and performance units granted to eligible employees under the
Equity Incentive Compensation Plan and the Performance Unit Plan, respectively,
and upon the exercise of option awards and options granted to eligible
employees under the Equity Incentive Compensation Plan and the Stock Option
Plan, respectively. Shares of ESOP Stock are not subject to any of the Voting
Agreements.
The Voting Agreements provide that, before any vote of the stockholders of
the Company occurs, a preliminary vote (the "Preliminary Vote") will be taken
at which each Signatory who is an employee of the Company on such date may vote
all of his shares of Common Stock subject to the Voting Agreements in such
manner as such Signatory may determine in his sole discretion. At any meeting
of the stockholders called to vote with respect to any corporate action, a
Signatory who was an employee of the Company at the time of the Preliminary
Vote or a trustee for a trust that holds shares of Common Stock on behalf of
such employee must vote the shares of Common Stock that are subject to the
Voting Agreements in accordance with the vote of the majority of the shares of
Common Stock voted in the Preliminary Vote. Signatories who are no longer
employed by the Company on the date of the Preliminary Vote are not required to
vote such shares of Common Stock in accordance with the vote of the majority of
the shares of Common Stock voted in the Preliminary Vote. See "Stockholders'
Agreement".
At April 10, 1995, 24,761,160 shares of Common Stock (constituting
approximately 30.1% of the votes that are entitled to be cast at the 1995
Annual Meeting) were subject to voting restrictions contained in the Voting
Agreements and will be required to be voted in accordance with the results of
this year's Preliminary Vote. A Preliminary Vote with respect to the proposals
presented in this Proxy Statement will be taken on or about May 22, 1995.
Pursuant to the Voting Agreements, all such shares of Common Stock are required
to be voted in accordance with the vote of the majority of the shares of Common
Stock voted in the Preliminary Vote.
The expenses of the preparation of proxy materials and the solicitation of
proxies for the 1995 Annual Meeting will be borne by the Company. In addition
to the solicitation of proxies by mail, solicitation may be made by certain
employees of the Company by telephone, telegraph or other means and by
Georgeson & Company Inc. Employees will receive no additional compensation for
such solicitation, and Georgeson & Company Inc. will receive a fee of $7,000
for its services. The Company will reimburse brokers, including Morgan Stanley,
and other nominees for costs incurred by them in mailing proxy materials to
beneficial holders in accordance with the rules of the NYSE.
In February 1992, the Board of Directors approved a change in the Company's
fiscal year-end from December 31 to January 31, effective for the 1992 fiscal
year, and the period from January 1, 1992 to January 31, 1992 was a transition
period. As used herein, "Fiscal 1992" refers to the twelve month period from
February 1, 1992 to January 31, 1993, "Thirteen Month Period" refers to the
thirteen month period from January 1, 1992 to January 31, 1993, "Fiscal 1993"
refers to the twelve month period from February 1, 1993 to January 31, 1994 and
"Fiscal 1994" refers to the twelve month period from February 1, 1994 to
January 31, 1995. In February 1995, the Board of Directors approved a change in
the Company's fiscal year-end from January 31 to November 30, effective for the
1995 fiscal year.
2
<PAGE>
ELECTION OF DIRECTORS
Eleven persons are to be elected to serve on the Board of Directors until the
Company's next Annual Meeting and their respective successors shall have been
elected and qualified.
If any nominee shall become unable to stand for election as a director at the
meeting, an event not now anticipated by the Board of Directors, the proxy may
be voted for a substitute designated by the Board of Directors. The nominees
for election as directors and a brief biography of each nominee are listed
below. There are no family relationships among any directors, executive
officers or nominees.
- --------------------------------------------------------------------------------
Richard B. Fisher
Mr. Fisher, age 58, has served as Chairman of the Board of Directors of the
Company and Morgan Stanley since January 1991. From January 1984 through
December 1990, he served as President of the Company and Morgan Stanley. He has
been a director and a Managing Director of the Company since July 1975 and a
director and a Managing Director of Morgan Stanley since July 1970. He was a
partner in Morgan Stanley & Co., the predecessor of Morgan Stanley, from July
1970 through June 1975.
- --------------------------------------------------------------------------------
John J. Mack
Mr. Mack, age 50, has served as President of the Company and Morgan Stanley
since June 1993. He has been a director and a Managing Director of the Company
since December 1987 and was a director and a Managing Director of the Company
from January 1979 to March 1986. Mr. Mack has been a director and a Managing
Director of Morgan Stanley since January 1979.
- --------------------------------------------------------------------------------
Barton M. Biggs
Mr. Biggs, age 62, has been a director and a Managing Director of the Company
since May 1991 and a director and a Managing Director of Morgan Stanley since
July 1973. He was a director and a Managing Director of the Company from July
1975 to March 1986. He was a partner in Morgan Stanley & Co. from June 1973
through June 1975. Mr. Biggs is also chairman of the board of directors of The
Latin American Discovery Fund, Inc., Morgan Stanley Emerging Markets Fund,
Inc., Morgan Stanley Africa Investment Fund, Inc., Morgan Stanley India
Investment Fund, Inc. and Morgan Stanley Emerging Markets Debt Fund, Inc.
- --------------------------------------------------------------------------------
Peter F. Karches
Mr. Karches, age 43, has been a director and Managing Director of the Company
since February 1994. He has also served as director and Managing Director of
Morgan Stanley since January 1985.
- --------------------------------------------------------------------------------
Sir David A. Walker
Sir David Walker, age 55, has been a director of the Company since November
1994, a director of Morgan Stanley since February 1995 and a Managing Director
of Morgan Stanley since November 1994. Before joining the Company, Sir David
was Deputy Chairman of Lloyds Bank PLC in England. From 1988 to 1992 he was
Chairman of the Securities and Investments Board, the British authority that
regulates the securities markets. From 1982 to 1988 he was the executive
director of the Bank of England and remained as a non-executive director at the
Bank until early 1993. Sir David is also a director of Reuters Holdings PLC.
- --------------------------------------------------------------------------------
3
<PAGE>
Daniel B. Burke
Mr. Burke, age 66, is retired. He served as chief executive officer of
Capital Cities/ABC, Inc. from 1990 until February 1994. He also served as
president and chief operating officer of that corporation from 1986 until
February 1994 and has been one of its directors since 1967. Mr. Burke is also a
director of Avon Products, Inc., Consolidated Rail Corporation, and Rohm and
Haas Company. Mr. Burke has been a director of the Company since February 1994.
- --------------------------------------------------------------------------------
Dick Cheney
Mr. Cheney, age 54, has been a senior fellow of the American Enterprise
Institute, a public policy research organization, since January 1993. He served
as Secretary of Defense of the United States from March 1989 to January 1993
and as a member of the United States House of Representatives from January 1979
to March 1989. Mr. Cheney is also a director of IGI, Inc., The Proctor & Gamble
Company, Union Pacific Corporation, and U.S. West, Inc. Mr. Cheney has been a
director of the Company since June 1993.
- --------------------------------------------------------------------------------
S. Parker Gilbert
Mr. Gilbert, age 61, is retired. He served as Chairman of the Board of
Directors of the Company and Morgan Stanley from January 1984 through December
1990. He was President of the Company and Morgan Stanley from January 1983
through December 1983. He was a Managing Director of the Company from July 1975
through December 1990 and a director and a Managing Director of Morgan Stanley
from May 1970 through December 1990. From January 1969 through June 1975, Mr.
Gilbert was a partner in Morgan Stanley & Co. He has been a director of the
Company since July 1975. Mr. Gilbert is also a director of Burlington Resources
Inc., ITT Corporation, and Taubman Centers, Inc.
- --------------------------------------------------------------------------------
Allen E. Murray
Mr. Murray, age 66, is retired. He served as chairman of the board of
directors and chief executive officer of Mobil Corporation from February 1986
until March 1994 and as one of its directors from May 1977 until March 1994.
Mr. Murray also served as president and chief operating officer of that
corporation from November 1984 until March 1993. He is also a director of
Lockheed Martin Corporation, Metropolitan Life Insurance Company and Minnesota
Mining & Manufacturing Company. Mr. Murray has been a director of the Company
since November 1992.
- --------------------------------------------------------------------------------
Paul F. Oreffice
Mr. Oreffice, age 67, is retired. He served as chairman of the board of
directors of The Dow Chemical Company from May 1986 until December 1992 and was
one of its directors from January 1971 until December 1992. Mr. Oreffice served
as chief executive officer of that corporation from May 1978 until December
1987 and as president from May 1978 until May 1987. He is also a director of
CIGNA Corporation, The Coca-Cola Company, and Northern Telecom Limited. Mr.
Oreffice has been a director of the Company since December 1987.
- --------------------------------------------------------------------------------
Paul J. Rizzo
Mr. Rizzo, age 67, is retired. He served as Vice Chairman and Director of
International Business Machines Corporation from January 1993 through December
1994. He has been a partner in Franklin Street Partners since 1992. From
September 1987 until 1992, he was Dean of Kenan-Flagler Business School at the
University of North Carolina--Chapel Hill. Mr. Rizzo is also a director of
Johnson & Johnson, McGraw-Hill, Inc., and Ryder System, Inc. Mr. Rizzo was a
director of the Company from July 1986 through December 1992 and has been a
director since February 1995.
- --------------------------------------------------------------------------------
4
<PAGE>
BOARD OF DIRECTORS MEETINGS, COMMITTEES AND FEES
The Board of Directors held six meetings and acted by unanimous written
consent on three occasions during Fiscal 1994. Messrs. Fisher, Mack, Biggs,
Karches, Matschullat (who is not standing for re-election to the Board of
Directors) and Walker currently are the members of the Executive Committee of
the Board of Directors, which is authorized to exercise all the powers of the
Board of Directors in the management of the business and affairs of the Company
to the fullest extent permitted by law and the Certificate of Incorporation of
the Company. The Executive Committee of the Board of Directors held one meeting
and acted by unanimous written consent on eight occasions during Fiscal 1994.
In addition to the Executive Committee, the Board of Directors has established
a standing Audit Committee and a standing Compensation Committee. The Company
does not maintain a standing nominating committee.
The Audit Committee, among other things, recommends to the Board of Directors
the Company's independent auditors, confers with the Company's independent
auditors and internal auditors concerning the scope of their respective
examinations, reviews the Company's financial statements and the work of the
Company's independent auditors and internal auditors and obtains
recommendations concerning internal controls. Messrs. Oreffice and Murray are
the current members of the Audit Committee. The Audit Committee held three
meetings during Fiscal 1994.
The Company's Compensation Committee determines the compensation policies
applicable to the senior officers of the Company and establishes the total
compensation for each senior officer in light of these policies. The
Compensation Committee also addresses all questions of interpretation,
administration and application of the Company's employee benefit plans,
including the Equity Incentive Compensation Plan, the Stock Option Plan, the
Performance Unit Plan and the 1988 Capital Accumulation Plan (the "Capital
Accumulation Plan"). The Compensation Committee held three meetings and acted
by unanimous written consent on five occasions during Fiscal 1994. The current
members of the Compensation Committee are Messrs. Oreffice, Gilbert and Murray.
See "Compensation Committee Report on Executive Officer Compensation";
"Compensation Committee Interlocks and Insider Participation".
During Fiscal 1994, each of the Directors attended at least seventy-five
percent of the meetings of the Board of Directors and the Committees on which
he served.
Messrs. Fisher, Mack, Biggs, Karches, Matschullat and Walker do not receive
any additional compensation for acting as directors of the Company. Directors
who are not employees of the Company or a subsidiary (the "Outside Directors")
receive a director's fee of $40,000 for each full fiscal year served (prorated
for those directors serving part of a fiscal year). Each Outside Director who
served on the Board of Directors in Fiscal 1994 has been granted 200 shares of
Common Stock pursuant to the Company's 1993 Stock Plan for Outside Directors
for services to the Company during Fiscal 1994 (prorated for those directors
serving part of Fiscal 1994) and in subsequent fiscal years each Outside
Director will be granted 200 shares of Common Stock for each full fiscal year
served (prorated for any director serving part of the year). Directors receive
no additional compensation for participation on committees of the Board. Lewis
W. Bernard, who served as a director of the Company until June 1994, was paid
$23,611 for his services as an Advisory Director during Fiscal 1994. In
addition, pursuant to a consulting arrangement with the Company for his
consulting services during Fiscal 1994, Mr. Cheney was paid $100,000. For his
services during Fiscal 1995, Mr. Cheney will be paid $100,000 and, at the
Company's sole discretion, a year-end bonus.
5
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table shows certain information concerning the number of shares
of the Company's capital stock beneficially owned, directly or indirectly, as
of April 10, 1995, by each director and nominee, and by all current directors
and executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK
-------------------
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
BENEFICIAL OWNERS OWNERSHIP OF CLASS
----------------- ---------- --------
<S> <C> <C>
Richard B. Fisher(1)(2)(3)(4)........................ 2,789,616 3.6%
John J. Mack(1)(2)(3)(4)............................. 1,375,826 1.8%
Barton M. Biggs(1)(2)(3)(4).......................... 1,350,489 1.8%
Peter F. Karches(1)(2)(3)(4)......................... 651,923 *
Robert W. Matschullat(1)(2)(3)(4).................... 395,563 *
Sir David A. Walker.................................. 0 *
Daniel B. Burke...................................... 1,200 *
Dick Cheney.......................................... 833 *
S. Parker Gilbert(2)(4).............................. 1,399,066 1.8%
Allen E. Murray...................................... 3,050 *
Paul F. Oreffice..................................... 12,600 *
Paul J. Rizzo........................................ 1,483 *
All current directors and executive officers as a
group (15 persons)(1)(2)(3)(4)...................... 8,123,956 10.5%
</TABLE>
- --------
(1) Except as otherwise disclosed below, the voting and disposition of the
shares of Common Stock are subject to the terms of the Voting Agreements.
See "Introduction" and "Stockholders' Agreement".
(2) Includes 313,242; 329,849; 154,333; 200,149; 110,928; 199,760; and
1,377,052 shares for Messrs. Fisher, Mack, Biggs, Karches, Matschullat,
Gilbert and all current directors and executive officers as a group,
respectively, that may be acquired upon the exercise of options that are
exercisable within 60 days after April 10, 1995. Such options were granted
pursuant to the Equity Incentive Compensation Plan or the Stock Option
Plan.
(3) Includes 200,163; 197,341; 138,256; 250,175; 112,001; and 967,976 shares of
Common Stock underlying stock unit awards granted Messrs. Fisher, Mack,
Biggs, Karches, Matschullat and all current directors and executive
officers as a group, respectively, as part of 1990, 1991, Thirteen Month
Period, Fiscal 1993 and Fiscal 1994 compensation pursuant to the Equity
Incentive Compensation Plan. With respect to all such stock unit awards, an
equivalent number of shares of Common Stock held in trust will be voted in
accordance with the results of the Preliminary Vote.
(4) Includes 1,056.52; 1,056.52; 1,056.52; 1,056.52; 1,056.52; 332.37; and
6,918.32 shares of Common Stock into which an equivalent number of shares
of ESOP Stock are convertible which have been allocated to Messrs. Fisher,
Mack, Biggs, Karches, Matschullat, Gilbert and all current directors and
executive officers as a group, respectively. Each share of ESOP Stock is
entitled to 1.35 votes with respect to each matter to be voted on at the
1995 Annual Meeting. ESOP participants have the ability to direct the
voting with respect to ESOP Stock allocated to them. Such shares are not
subject to the Voting Agreements.
- --------
* Indicates beneficial ownership of less than 1% of the outstanding Common
Stock.
6
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding each person or
group of persons known to the Company as of April 10, 1995 to be the
beneficial owner of more than 5% of any class of the Company's voting
securities.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
BENEFICIALLY OWNED
NAME OF PERSONS OR ------------------------------
IDENTITY OF GROUP NUMBER PERCENT
------------------ ---------- -------
<S> <C> <C>
Signatories to Voting Agreements(1)............. 32,426,368(2)(3)(4)(5) 38.3%
The Equitable Companies Incorporated(6)......... 5,149,595(7) 6.7%
FMR Corp.(8).................................... 4,433,400(9) 5.8%
</TABLE>
- --------
(1) The voting of the shares of Common Stock received in connection with the
Company's 1986 recapitalization is subject to the voting restrictions
contained in the Stockholders' Agreement. The voting of Common Stock
issued to employees in connection with the Equity Incentive Compensation
Plan, the Stock Option Plan and the Performance Unit Plan is generally
subject to similar voting restrictions. The information provided relates
to the voting power of such securities. The Signatories to the Voting
Agreements do not share dispositive power. See "Introduction" and
"Stockholders' Agreement".
(2) Includes 7,454,304 shares of Common Stock that may be acquired upon the
exercise of options that are exercisable within 60 days after April 10,
1995. Such options were granted pursuant to the Equity Incentive
Compensation Plan or the Stock Option Plan. Of these shares, 292,311 will
not be subject to the Voting Agreements.
(3) Includes 12,729,329 shares underlying stock unit awards granted pursuant
to the Equity Incentive Compensation Plan as part of 1990, 1991, Thirteen
Month Period, Fiscal 1993 and Fiscal 1994 compensation. An equivalent
number of shares of Common Stock held in trust will be voted in accordance
with the results of the Preliminary Vote.
(4) Includes 210,904 shares of Common Stock that are not subject to the Voting
Agreements.
(5) Does not include 316,556 shares of ESOP Stock allocated to the
Signatories, each share of which is entitled to 1.35 votes with respect to
each matter to be voted on at the 1995 Annual Meeting. Such shares are not
subject to the Voting Agreements.
(6) The Equitable Companies Incorporated ("Equitable"), having its principal
office at 787 Seventh Avenue, New York, NY 10019.
(7) Based on Amendment No. 2 to the Schedule 13G filed for the year ended
December 31, 1994 by Equitable jointly on behalf of AXA, a French
insurance holding company, and a group of five French mutual insurance
companies (the "Mutuelles AXA"). Such Amendment No. 2 indicates that
shares are held by subsidiaries of Equitable as follows: (i) 4,371,305
shares are held on behalf of client discretionary investment advisory
accounts by Alliance Capital Management L.P. (which has sole dispositive
power over all such shares, sole voting power over 2,506,980 such shares,
and shared voting power over 90,800 such shares); (ii) 2,990 shares are
held by Donaldson, Lufkin & Jenrette Securities Corporation for investment
purposes (which has shared dispositive power and no voting power over all
such shares); (iii) 765,000 shares are held by The Equitable Life
Assurance Society of the United States solely for investment purposes
(which has sole dispositive power over all such shares, sole voting power
over 720,000 such shares and shared voting power over 45,000 such shares);
and (iv) 1,800 shares are held on behalf of client discretionary
investment accounts by Wood, Struthers & Winthrop Management Corporation
(which has sole dispositive power over all such shares and shared voting
power over 750 such shares). Such Amendment No. 2 further indicates that
each of AXA, the Mutuelles AXA, as a group, and Equitable, by virtue of
their relationship to Equitable's subsidiaries, may be deemed to have sole
voting power over 3,358,480 of the above-mentioned shares, shared voting
power over 136,550 such shares, sole dispositive power over 5,146,605 such
shares and shared dispositive power over 2,990 such shares. In addition,
such Amendment No. 2 indicates that an additional 8,500 shares are held by
AXA RE United States, as to which shares Equitable disclaims beneficial
ownership.
7
<PAGE>
(8) FMR Corp., having its principal office at 82 Devonshire Street, Boston, MA
02109.
(9) Based on the Schedule 13G filed for the year ended December 31, 1994. Such
Schedule 13G indicates that Edward C. Johnson 3rd (chairman of FMR Corp.),
Abigail P. Johnson and various Johnson family members and trusts for the
benefit of Johnson family members, through their ownership of voting common
stock of FMR Corp. and the execution of a family shareholders' voting
agreement, form a controlling group with respect to FMR Corp. Such Schedule
13G indicates that 4,349,300 shares are beneficially owned by Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of
FMR Corp., as a result of acting as an investment adviser to several
investment companies (the "Fidelity Funds"). Mr. Johnson, FMR Corp.,
through its control of Fidelity, and the Fidelity Funds each has sole
dispositive power over all such shares. Neither Mr. Johnson nor FMR Corp.
has sole voting power over such shares, as such power resides with the
Fidelity Funds' Boards of Trustees and is carried out by Fidelity under
written guidelines established by such Boards. Such Schedule 13G also
indicates that 84,100 shares are beneficially owned by Fidelity Management
Trust Company ("Fidelity Trust"), a wholly-owned subsidiary of FMR Corp.
and a bank, as a result of its serving as investment manager of certain
institutional accounts. Mr. Johnson and FMR Corp., through its control of
Fidelity Trust, have sole dispositive power and no voting power over all
such shares.
STOCKHOLDERS' AGREEMENT
Prior to a recapitalization effected in contemplation of the Company's
initial public offering on March 21, 1986, the Company and the Recapitalization
Signatories entered into the Stockholders' Agreement, which relates to the
disposition and voting of the shares of Common Stock acquired by such
Recapitalization Signatories pursuant to the recapitalization (the
"Recapitalization Common Stock"). The Stockholders' Agreement does not prohibit
or restrict the acquisition, ownership, disposition or voting by
Recapitalization Signatories of any shares of Common Stock not acquired in
connection with the Company's recapitalization. Shares acquired pursuant to the
Company's employee benefit plans are generally subject to similar restrictions
under the Plan Agreements although not all of such shares are subject to the
age restrictions described below.
Except as otherwise determined by the Board of Directors of the Company and
subject to applicable legal requirements, Recapitalization Signatories employed
by the Company may dispose of their Recapitalization Common Stock only as
provided in the Stockholders' Agreement. The Stockholders' Agreement permits
each such Recapitalization Signatory to dispose of shares of such
Recapitalization Signatory's Recapitalization Common Stock and/or shares of
Common Stock acquired pursuant to the Company's Performance Unit Plan and/or
Stock Option Plan ("Plan Stock" and, together with the Recapitalization Common
Stock, "Total Restricted Stock") in the following amounts, representing the
percentage of Total Restricted Stock owned by such Recapitalization Signatory
that is permitted to be sold:
<TABLE>
<CAPTION>
AGE AT DATE % OF TOTAL RESTRICTED
OF SALE STOCK PERMITTED TO BE SOLD
----------- --------------------------
<S> <C>
35 through 38 10%
39 through 42 Additional 10%
43 through 46 Additional 10%
47 through 49 Additional 10%
50 and above Additional 10%
</TABLE>
Such restrictions are in effect only while the Signatory is an employee of
the Company.
Pursuant to the revised terms of the Stockholders' Agreement, a
Recapitalization Signatory employed by the Company may pledge his shares of
Recapitalization Common Stock that are not otherwise permitted to be disposed
of under the Stockholders' Agreement to a bank to secure a bona fide full
recourse loan for value. Any shares of Recapitalization Common Stock so pledged
would be free from the restrictions on disposition described above so long as
such shares of Recapitalization Common Stock are so pledged, but would
thereafter be once again subject to the restrictions on disposition described
above, unless the bank has sold such shares of Recapitalization Common Stock
pursuant to a bona fide foreclosure proceeding. Any such shares of
Recapitalization Common Stock sold pursuant to any such bona fide foreclosure
proceeding would be free from the provisions of the Stockholders' Agreement.
See "Introduction" for information concerning the voting restrictions imposed
on shares of Recapitalization Common Stock pursuant to the Stockholders'
Agreement.
8
<PAGE>
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
Other than as described in this Proxy Statement, no director or executive
officer of the Company was indebted to the Company during the last fiscal year
for any amount in excess of $60,000, and there were no related party
transactions among the Company and its executive officers, directors and the
holders of more than 5% of the outstanding shares of Common Stock.
Mr. Mack, through a corporation, owns a car that is utilized in Company
business. Reimbursements are made at rates that the Company believes could have
been obtained from non-affiliated third parties for comparable services.
Aggregate payments made by the Company to Mr. Mack's corporation during the
period from February 1, 1994 to March 31, 1995 were $76,000.
The Company extends, and in the ordinary course of its business during Fiscal
1994 the Company extended, credit to certain directors, officers and employees
of the Company and Morgan Stanley, as well as to members of their immediate
families, in connection with their purchase of securities. Such extensions of
credit have been made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with non-affiliated third parties, and did not involve more than normal risk of
collectibility or present other unfavorable features. To the extent that
officers and employees of the Company and Morgan Stanley (and members of their
immediate families) wish to purchase securities in brokerage transactions, they
are ordinarily required to do so through Morgan Stanley, which offers them a
discount of up to 40% on its standard commission rate. Morgan Stanley also,
from time to time and in the ordinary course of its business, enters into
transactions involving the purchase or sale of securities from or to certain
directors, officers and employees of the Company and Morgan Stanley and members
of their immediate families, as principal. Such purchases and sales of
securities on a principal basis are effected at a discount from the dealer
mark-up or mark-down, as the case may be, charged to non-affiliated third
parties. Pursuant to its stock repurchase authorization, the Company also may
repurchase or acquire shares of Common Stock in the open market and in
privately negotiated transactions, including transactions with directors,
executive officers and employees. Such transactions are in the ordinary course
of business and at prevailing market prices.
The Company, from time to time, also makes advances to certain of its
directors, officers and employees against commissions and other compensation
that would otherwise be payable to them in the ordinary course of business and
loans in connection with housing and relocation expenses. No interest is
charged by the Company on such advances and loans.
Under the federal securities laws, the Company's directors and executive
officers and any person owning more than ten percent of the Company's Common
Stock are required to report their initial ownership of Common Stock and any
subsequent change in that ownership to the Securities and Exchange Commission
(the "SEC") and the NYSE and to provide copies of any such forms they file to
the Company. Based solely upon its review of copies of forms and written
representations from certain reporting persons, the Company believes that for
Fiscal 1994, each of its officers, directors and greater than ten percent
shareholders has complied with all such applicable filing requirements.
9
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Cash and Certain Other Compensation. The following table
summarizes the compensation paid by the Company and its subsidiaries to the
Company's five most highly compensated executive officers who were serving as
executive officers at January 31, 1995 (the "named executive officers") for
services rendered in all capacities to the Company and its subsidiaries for
Fiscal 1992, Fiscal 1993 and Fiscal 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ---------------------
NAME RESTRICTED SECURITIES
AND STOCK UNDERLYING ALL OTHER
PRINCIPAL AWARD(S) OPTIONS COMPENSATION
POSITION YEAR SALARY ($)(2)(3) BONUS ($)(3)(4) ($)(5) (#)(6) ($)(7)
- ---------------------- ---- ---------------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard B. Fisher: 1994 $575,000 $2,062,500 -- 99,138 $15,000
Chairman of the Board 1993 475,000 4,437,500 $5,628,494 -- 23,584
of Directors and 1992 475,000 2,862,500 2,895,375 -- 20,979
Managing Director(1)
John J. Mack: 1994 $550,000 $2,025,000 -- 96,596 $15,000
President and 1993 450,000 4,325,000 $5,463,488 -- 23,584
Managing Director 1992 450,000 2,875,000 2,917,110 -- 20,979
Barton M. Biggs: 1994 $450,000 $1,700,000 -- 74,565 $15,000
Managing Director 1993 450,000 2,950,000 $3,446,770 -- 23,584
1992 450,000 2,375,000 2,046,348 -- 20,979
Peter F. Karches: 1994 $300,000 $2,025,000 -- 96,596 $15,000
Managing Director
Robert W. Matschullat: 1994 $450,000 $1,475,000 -- 59,313 $15,000
Managing Director 1993 450,000 2,950,000 $3,446,770 -- 23,584
1992 300,000 2,450,000 2,176,935 -- 20,979
</TABLE>
- --------
For each of the above named executive officers, compensatory information is
provided for years during which they served as executive officers of the
Company.
(1) The Company does not have an executive officer designated as "Chief
Executive Officer"; however, for purposes of complying with rules of the
SEC, Mr. Fisher is deemed the "CEO" in this table.
(2) As a result of the change in fiscal year in 1992, Messrs. Fisher, Mack,
Biggs and Matschullat were paid $40,232, $38,115, $38,115 and $25,410,
respectively, representing the additional salary earned for the month of
January 1992, which is approximately 1/12 of the amount shown in the table
for Fiscal 1992.
(3) Includes amounts contributed by each of the named executive officers to
various deferred compensation plans of the Company.
(4) Includes for the years indicated amounts representing annual cash bonus.
The amounts reported also include the value of any units awarded pursuant
to the Capital Accumulation Plan. The Capital Accumulation Plan provides
participation in certain investments that the Company has made directly or
indirectly in other entities.
As result of the change in fiscal year in 1992, Messrs. Fisher, Mack, Biggs
and Matschullat were paid an additional $242,452, $243,511, $201,161 and
$207,513, respectively, representing cash bonus and Capital Accumulation
Plan units earned for the month of January 1992, which is approximately 1/12
of the amount shown in the table for Fiscal 1992.
(5) The amounts reported represent the market value of the Common Stock
underlying vested and unvested restricted stock units at the date of grant,
without taking into account any diminution in value attributable to the
restrictions on such stock units. Awards of restricted stock units were
made on
10
<PAGE>
February 25, 1994 for performance in Fiscal 1993; the closing price of the
Common Stock on that date as reported on the Consolidated Transaction
Reporting System was $66.75 per share. Awards of restricted stock were made
on February 9, 1993 for performance in the Thirteen Month Period; the
closing price of the Common Stock on that date as reported on the
Consolidated Transaction Reporting System was $59.875 per share.
As a result of the change in fiscal year in 1992, Messrs. Fisher, Mack,
Biggs and Matschullat were awarded restricted stock units valued at grant
date at $245,188, $247,044, $173,278 and $184,355, respectively,
representing restricted stock units earned for the month of January 1992,
which is approximately 1/12 of the amount shown in the table for Fiscal
1992.
The vesting schedule for restricted stock units awarded as part of Fiscal
1992 and Fiscal 1993 compensation to all Managing Directors, including the
named executive officers, is as follows: 60% of each award reported in the
table above vested upon grant; the remaining 40% of the award will vest in
ten equal annual installments. Dividend equivalents are paid on restricted
stock units (including unvested units) at the same rate as dividends paid to
stockholders of Common Stock.
Vested and unvested restricted stock units awarded as part of Fiscal 1992
and Fiscal 1993 compensation generally do not convert into shares of Common
Stock and are not transferable for ten years after award. Restricted stock
units, whether vested or unvested, may not be sold, assigned, exchanged,
pledged, hypothecated or otherwise disposed of or encumbered prior to the
lapse of restrictions on transferability. Restricted stock units, whether
vested or unvested, are subject to forfeiture in certain circumstances
specified by the Compensation Committee.
The aggregate number of restricted stock units (including units awarded
prior to the years reported) and the market value ascribed thereto as of
January 31, 1995 for each of the named executive officers are as follows:
Mr. Fisher-200,163 ($12,035,801); Mr. Mack-197,341 ($11,866,114); Mr. Biggs-
138,256 ($8,313,333); Mr. Karches-250,175 ($15,043,023) and Mr. Matschullat-
112,001 ($6,734,620). For a discussion of the difference between the value
ascribed to restricted stock units pursuant to SEC rules and the value
ascribed to restricted stock units by the Compensation Committee, see
"Compensation Committee Report on Executive Officer Compensation".
(6) Awards of stock options were made for services performed in Fiscal Year
1994. The vesting schedule for stock options awarded as part of Fiscal 1994
compensation to all Managing Directors, including the named executive
officers, is as follows: 60% of each award reported in the table above
vested and was exercisable upon grant; the remaining 40% of the award will
vest and become exercisable in nine annual installments. The expiration
date for the stock options is January 31, 2005. The terms of stock option
awards may vary slightly in certain non-U.S. jurisdictions.
Stock options awarded as part of Fiscal 1994 compensation, whether vested or
unvested, may not be sold, assigned, exchanged, pledged, hypothecated or
otherwise disposed of or encumbered. Stock options, whether vested or
unvested, are subject to forfeiture in certain circumstances specified by
the Compensation Committee. Any shares acquired upon the exercise of options
generally may not be transferred or sold prior to January 31, 2005, except
to the extent required to cover the exercise price and tax liability arising
upon exercise.
(7) The amounts reported consist of contributions by the Company to the
Company's Deferred Profit Sharing Plan ("DPSP") and the Company's Employee
Stock Ownership Plan ("ESOP"). For amounts reported, the Company
contributed 50% to the DPSP and 50% to the ESOP. Contributions to the DPSP
and the ESOP are made on December 31 and relate to the preceding twelve
months. No contributions were attributable to the month of January 1995. As
a result of the change in fiscal year, the Company contributed an
additional $1,907 (50% attributable to the DPSP and 50% attributable to the
ESOP) on behalf of each of Messrs. Fisher, Mack, Biggs and Matschullat
representing amounts earned for the month of January 1992, which is
approximately 1/12 of the amount shown in the table for Fiscal 1992.
Compensation to Managing Directors and Principals of Morgan Stanley who are
not executive officers of the Company may exceed the compensation paid to the
named executive officers.
11
<PAGE>
Stock Options. The following table provides information concerning stock
options granted to each named executive officer by the Company for services
performed during Fiscal 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE PRESENT
OPTIONS EMPLOYEES PRICE VALUE
NAME GRANTED (#)(1) IN FISCAL YEAR ($/SH)(2) EXPIRATION DATE ($)(3)
- ---- -------------- -------------- --------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Richard B. Fisher....... 99,138 1.8% $59.50 January 31, 2005 $1,460,898
John J. Mack............ 96,596 1.7% 59.50 January 31, 2005 1,423,439
Barton M. Biggs......... 74,565 1.3% 59.50 January 31, 2005 1,098,790
Peter F. Karches........ 96,596 1.7% 59.50 January 31, 2005 1,423,439
Robert W. Matschullat... 59,313 1.1% 59.50 January 31, 2005 874,036
</TABLE>
- --------
(1) The stock option grants provide that 60% of the options granted are fully
vested and exercisable upon grant. The remaining 40% of the options granted
vest and become exercisable in nine annual installments. Any shares
acquired upon the exercise of options generally may not be transferred or
sold prior to January 31, 2005, except to the extent required to cover the
exercise price and tax liability arising upon exercise.
(2) The Compensation Committee approved the grant of stock options on February
13, 1995 with an exercise price, determined pursuant to its authority under
the Equity Incentive Compensation Plan, equal to the average high and low
sale price of a share of Common Stock, as reported on the Consolidated
Transaction Reporting System, for the last five trading days of Fiscal
1994, the fiscal year in which the services to which the option grants
relate were performed.
(3) Options were valued using a modified Black-Scholes option pricing model.
The assumptions used as the variables in the model include: 23% volatility
(Common Stock price daily volatility for one-year period prior to January
31, 1995); a 7.51% risk-free rate of return (the average continuous yield
of a ten-year zero coupon U.S. Treasury Bond expiring November 2004, taken
over the last five trading days of Fiscal 1994); a 1.9% annual dividend
yield (the dividend yield at January 31, 1995); and a ten year option life
(equal to the term of the option, assuming exercise at the end of the
option term). A discount of 40% was applied to the option value yielded by
the pricing model to reflect the non-transferability of the shares of
Common Stock underlying such stock options. The data relating to the
hypothetical value is presented pursuant to SEC rules. The actual amount,
if any, realized upon the exercise of stock options will depend on the
market price of the Common Stock relative to the exercise price of the
stock option at the time the stock option is exercised. There is no
assurance that the hypothetical values of the stock options reflected in
the table will be realized.
12
<PAGE>
The following table provides information concerning unexercised stock options
held by each named executive officer as of January 31, 1995 and reflects the
fact that no options were exercised during Fiscal 1994 by the named executive
officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FY-END (#)(1) FY-END ($)(2)
------------------------- -------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard B. Fisher....... -- -- 313,242 39,656 $8,003,689 $0
John J. Mack............ -- -- 329,849 38,639 9,198,691 0
Barton M. Biggs......... -- -- 184,492 29,826 4,680,623 0
Peter F. Karches........ -- -- 200,149 38,639 5,092,743 0
Robert W. Matschullat... -- -- 110,928 23,726 2,681,059 0
</TABLE>
- --------
(1) The sale or disposition of shares of Common Stock underlying certain of the
options is restricted.
(2) The value of unexercised, in-the-money options is based upon the difference
between the exercise prices of all such options and $59.50, the fair market
value, as determined by the Compensation Committee, of a share of Common
Stock, which is equal to the average high and low sale price of a share of
Common Stock, as reported on the Consolidated Transaction Reporting System,
for the last five trading days of Fiscal 1994. The actual amount, if any,
realized upon exercise of stock options will depend upon the market price
of the Common Stock relative to the exercise price per share of Common
Stock of the stock option at the time the stock option is exercised. There
is no assurance that the values of unexercised in-the-money stock options
reflected in this table will be realized.
Pension Plans. Morgan Stanley's Pension Plan (the "Pension Plan") is a
defined benefit pension plan which covers all employees of Morgan Stanley who
have completed at least one year of service with Morgan Stanley or one of its
affiliates. There is no maximum age limit to the eligibility requirements. The
Pension Plan provides for normal retirement benefits beginning at age 65 but
permits earlier retirement at or after attaining age 55 (subject to a reduction
in benefits if payments commence earlier than age 60). Salary is defined to
include the highest five years of base compensation during the last ten years
prior to retirement, excluding bonuses, overtime and other supplemental
compensation. All participants become vested after completing five years of
service.
In addition to the Pension Plan, Morgan Stanley has adopted an Excess Benefit
Plan for participants in the Pension Plan whose benefits are reduced pursuant
to limitations imposed by the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code") on pensions paid under Federal income tax qualified
plans. Employees covered by the Excess Benefit Plan receive a benefit equal to
the amount of benefit disallowed under the Pension Plan due to such
limitations, including for 1994 a $150,000 limit (subject to being increased
annually for inflation) on the amount of compensation that can be taken into
account for qualified pension plan purposes.
Morgan Stanley also maintains a Supplemental Executive Retirement Plan
covering current and former Managing Directors and Principals of Morgan Stanley
who are not less than 55 years of age and have completed at least five years of
service and whose age plus years of service equals or exceeds 65. Benefits
without any reduction are paid if payment occurs at or after age 60. Benefits
payable under the Supplemental Executive Retirement Plan are also reduced by
benefits payable under the Pension Plan and the Excess Benefit Plan and pension
plans of affiliates of Morgan Stanley and of former employers. For participants
who commence receiving benefits in 1989 and beyond, the annual benefit payable
under the Supplemental Executive Retirement Plan (as reduced in the preceding
sentence) is further reduced to the extent that total
13
<PAGE>
retirement benefits do not exceed $140,000. Participants are fully vested under
the Supplemental Executive Retirement Plan at all times. Messrs. Fisher and
Biggs currently meet the eligibility requirements of, and Mr. Gilbert is
currently receiving payments under, the Supplemental Executive Retirement Plan.
The following table illustrates the total estimated annual normal retirement
pension benefits, including Excess Benefit Plan and Supplemental Executive
Retirement Plan amounts, payable upon normal retirement at age 65 to
participants for the specified remuneration and years of credited service
classifications set forth below. Benefit amounts are computed on a straight
life annuity basis. There is no off-set for the payment of social security
benefits although the calculation of benefits takes social security covered
compensation into consideration.
PENSION PLAN TABLE
ANNUAL PENSION BENEFITS BASED ON YEARS OF CREDITED SERVICE AT AGE 65
<TABLE>
<CAPTION>
FINAL
AVERAGE
SALARY 5 YRS. 10 YRS. 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 50,000 $ 55,000 $ 60,000
150,000 30,000 45,000 60,000 75,000 75,000 82,500 90,000
200,000 40,000 60,000 80,000 100,000 100,000 110,000 120,000
250,000 50,000 75,000 100,000 125,000 125,000 137,500 140,000
300,000 60,000 90,000 120,000 140,000 140,000 140,000 154,522
350,000 70,000 105,000 140,000 140,000 140,000 154,947 180,772
400,000 80,000 120,000 140,000 140,000 147,873 177,447 207,022
450,000 90,000 135,000 140,000 140,000 166,623 199,947 233,272
500,000 100,000 140,000 140,000 148,298 185,373 222,447 259,522
550,000 110,000 140,000 140,000 163,298 204,123 244,947 285,772
600,000 120,000 140,000 140,000 178,298 222,873 267,447 312,022
650,000 130,000 140,000 144,974 193,298 241,623 289,947 338,272
700,000 140,000 140,000 156,224 208,298 260,373 312,447 364,522
</TABLE>
The compensation of the individuals named in the Summary Compensation Table
for purposes of determining benefits under the Pension Plan, the Excess Benefit
Plan and the Supplemental Executive Retirement Plan during calendar 1994 is the
amount reported as base salary in the Summary Compensation Table. As of March
31, 1995, the credited years of service (rounded to the nearest whole year) for
each of the individuals named in the Summary Compensation Table are as follows:
Mr. Fisher-33; Mr. Mack-21; Mr. Biggs-20; Mr. Karches-19; and Mr. Matschullat-
12.
14
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
The Company's Compensation Committee determines the compensation policies
applicable to the senior officers of the Company, including Messrs. Fisher,
Mack, Biggs, Karches and Matschullat, who were the five highest paid executive
officers for Fiscal 1994 (collectively, the "Senior Executives"). The Committee
establishes the total compensation for each of the Senior Executives in light
of these policies and in accordance with certain requirements imposed by
Section 162(m) of the Internal Revenue Code, as explained more fully below. In
addition, the Compensation Committee reviews proposed annual compensation
packages of other executive officers and certain Managing Directors, and
administers and makes awards under the Company's employee benefit plans,
including the Equity Incentive Compensation Plan and the Capital Accumulation
Plan.
The Compensation Committee is composed of Paul F. Oreffice, S. Parker Gilbert
and Allen E. Murray, none of whom is, or during the previous year has been, an
officer or employee of the Company. The Compensation Committee meets from time
to time and also acts by unanimous written consent. See "Board of Directors
Meetings, Committees and Fees".
The Company does not have an executive officer designated as "Chief Executive
Officer". For purposes of this Report, Mr. Fisher is referred to as the "Chief
Executive Officer".
COMPENSATION POLICIES APPLICABLE TO EXECUTIVE OFFICERS GENERALLY FOR FISCAL
1994. The Company's executive officer compensation program is designed to be
closely linked to corporate performance and returns to stockholders. To this
end, the Company has developed an overall compensation strategy and specific
compensation plans that tie a significant portion of executive officer
compensation to the Company's success in meeting annual and long-term
performance goals. The overall objectives of this strategy are to:
. support a pay-for-performance policy that differentiates compensation
based on corporate, business unit and individual performance;
. motivate executive officers to implement and achieve strategic business
initiatives and reward them for their achievement;
. provide compensation opportunities that are comparable to those offered
by other leading companies in the financial services industry, thus
allowing the Company to compete for and retain talented executive
officers who are critical to the Company's long-term success; and
. align the interests of executive officers with the long-term interests of
stockholders by paying a significant portion of executive officer
compensation with awards under the Company's equity compensation plans.
The compensation policies and strategic objectives that have been developed
for the Company's executive officers also are applied in determining
compensation and compensation plans for the Company's other Managing Directors
as well as for other officers and employees.
The total amount of compensation that the Compensation Committee authorizes
to be distributed to executive officers, Managing Directors and other employees
for Fiscal 1994 is primarily a function of the financial performance of the
Company as a whole. In determining the amount of compensation to be paid to
executive officers, the Compensation Committee (1) sets the parameters to be
used in allocating Total Reward (as defined below) between cash and non-cash
components for all executive officers, (2) determines the appropriate Total
Reward for each executive officer and (3) allocates the Total Reward for each
executive officer between cash and non-cash components based on the previously
determined parameters. In determining the size of aggregate annual Total Reward
payable to individuals other than the Senior Executives (whose Total Reward is
linked to a formula adopted in accordance with Section 162(m) of the Internal
Revenue Code, as more fully described below), no single performance factor or
formula is used since the Committee believes that rigid application of
quantitative performance measures would omit important
15
<PAGE>
qualitative considerations and could discourage important long-term strategic
decisions. Accordingly, the intent is to have the executive officer
compensation for each year vary in light of Company, business unit and
individual performance-related factors. The Compensation Committee takes into
consideration such factors as absolute levels of, and year-over-year changes
in, net revenues, net income, profit before taxes, earnings available to common
stockholders, earnings per share, book value per share and return on
stockholders' equity. The Compensation Committee also examines the ratios of
compensation to net revenue and compensation to pre-compensation profit before
taxes. Although the Compensation Committee considers the aforementioned
factors, the Compensation Committee does not assign specific weighting to the
factors. Instead, the determination of Total Reward is a more subjective
process which focuses on the financial performance factors of the Company and
business units as well as the performance of individuals.
The Compensation Committee also compares the financial performance of the
Company with the financial performance of the Financial Services Companies (as
defined below). For Fiscal 1994, the Compensation Committee recognized that the
Company's return on equity fell below the median return on equity for the
Financial Services Companies as a whole. The Compensation Committee noted,
however, that the Company continued to make significant strategic investments
in both technology and human resources reflecting the Company's long-term
commitment to expansion of its core businesses, and that such investments had a
negative impact on the Fiscal 1994 return on equity. While the Compensation
Committee considers the financial performance and chief executive officer
compensation of competitors in its determination of Total Reward, the
Compensation Committee does not attempt to set Total Reward in a range
established by a comparison of the financial performance and chief executive
officer compensation of the Financial Services Companies. For purposes of this
Report, the term "Financial Services Companies" refers collectively to the
following companies in the financial services industry: Bankers Trust New York
Corporation, The Bear Stearns Companies Inc., J.P. Morgan & Co. Incorporated,
Merrill Lynch & Co., Inc., Paine Webber Group Inc., Salomon Inc. and The
Travelers Inc. The Financial Services Companies are included in the MSCI (R)
Domestic Financial Services/Banking Group Index. See "Performance Graph".
COMPONENTS OF SENIOR EXECUTIVE AND EXECUTIVE OFFICER COMPENSATION. In
February 1995, executive officers were awarded Total Reward following a review
of the Company's Fiscal 1994 financial performance. The Compensation
Committee's policies applicable to each element of Fiscal 1994 compensation for
executive officers are discussed below.
The components of the executive officer compensation program are designed to
meet the Company's compensation policies. At present, the executive officer
compensation program is composed of two elements that make up the officer's
Total Reward: (A) base salary (plus fringe benefits typically offered to
executives of major corporations) and (B) incentive compensation which consists
of cash incentive compensation (bonus) and non-cash incentive compensation
(primarily restricted stock units and stock options). In addition, as Total
Reward increases, an increasing percentage of the total is in the form of the
Company's restricted stock units and stock options.
A. Base Salaries. Executive officer base salaries, which are established at
the beginning of the year, are a relatively small portion of overall
compensation. In determining base salaries individual experience,
responsibilities and tenure are taken into account. The base salaries of both
Mr. Fisher and Mr. Mack were increased in Fiscal 1994. These were the first
increases in the base salaries of Mr. Fisher and Mr. Mack since 1989 and 1990,
respectively. These increases were effected in order to keep their base
salaries within the mid-range of base salaries paid by the Financial Services
Companies. The base salaries for Mr. Fisher and Mr. Mack will remain at the
same annual rate for Fiscal 1995.
B. Incentive Compensation (Cash and Non-Cash). Executive officer incentive
compensation is based primarily on the Company's financial performance for the
year but also includes an assessment of individual and business unit
performance. The Company has consistently maintained the philosophy that
compensation of its executive officers and other key employees should be
directly and materially linked to operating performance. To achieve this
linkage, executive officer compensation is heavily weighted toward incentive
16
<PAGE>
compensation paid on the basis of performance. Historically, in years in which
the Company's financial performance has been particularly favorable, its
executive officers' incentive compensation has increased, and in less
favorable years such compensation has been reduced. For example, incentive
compensation for Fiscal 1994 is substantially less than Fiscal 1993,
reflecting the less favorable financial performance of the Company.
(i) SECTION 162(M) AND COMPENSATION POLICIES APPLICABLE TO THE SENIOR
EXECUTIVES. The Compensation Committee establishes the Total Reward for the
Senior Executives through the application of performance criteria. The
performance criteria were adopted in accordance with Section 162(m) of the
Internal Revenue Code, which limits the deductibility of compensation in
excess of $1,000,000 paid to the chief executive officer and the four other
most highly compensated officers of a corporation named in the Summary
Compensation Table unless the payments are made under qualifying performance-
based plans and upon the attainment of certain performance goals. In March
1994, the Compensation Committee established and approved performance criteria
applicable to the Senior Executives that determine the amount of Total Reward
payable to each of the Senior Executives. The performance criteria include a
formula which links compensation of the Senior Executives to the Company's
return on equity versus the Company's cost of equity capital and annual growth
in book value per share. The Compensation Committee has certified in
accordance with Section 162(m) that the Company's financial results for Fiscal
1994 have satisfied the performance criteria for Fiscal 1994. After an
analysis of the considerations set forth above, for Fiscal 1994 the
Compensation Committee awarded Total Reward to the Senior Executives that was
substantially below the amounts of Total Reward yielded by the application of
the compensation formula contained in the performance criteria.
Compensation payable to the Senior Executives has been paid partly in cash
and partly in the form of stock options. The Compensation Committee awarded an
average of approximately 35% of Senior Executives' Total Reward in stock
options for Fiscal 1994 compared with approximately 42% of Total Reward in
restricted stock units for Fiscal 1993.*
(ii) RESTRICTED STOCK UNITS AND STOCK OPTIONS. As part of incentive
compensation for Fiscal 1994, all Managing Directors, including all Senior
Executives, received awards of restricted stock units and/or stock options
under the Equity Incentive Compensation Plan. The value of restricted stock
units and/or stock options awarded to each Managing Director was a fixed
percentage of Total Reward applied on the same basis to all plan participants.
The value of stock-based compensation earned cannot be realized immediately
and will be dependent on the market value of the Company's stock well into the
future. Thus, the ultimate value of the restricted stock unit and stock option
awards will depend on the continued success of the Company and will provide a
continuing incentive to an executive officer long after the award has been
granted.
The value ascribed to such restricted stock units by the Compensation
Committee was based on a 40% discount from the fair market value of the Common
Stock in order to compensate for significant restrictions on disposition (by
sale or otherwise) of these units. The value ascribed to these units by the
Compensation Committee differs from the amounts reported in the Summary
Compensation Table under the column headed "Restricted Stock Awards" because
those amounts are based on the undiscounted price of Common Stock on the date
of grant. See "Compensation of Executive Officers--Summary of Cash and Certain
Other Compensation".
In addition, options to purchase Common Stock of the Company have been
awarded in lieu of a percentage of restricted stock units as part of executive
officer compensation for services rendered during Fiscal 1994. The number of
options awarded was calculated by multiplying the number of restricted stock
units that the individual would have otherwise received by 2.42, a figure
derived by the application of a modified Black-Scholes option pricing model.
See "Compensation of Executive Officers--Stock Options".
- --------
* Based upon the Compensation Committee's valuation of Total Reward, stock-
based compensation and Capital Accumulation Plan units.
17
<PAGE>
(iii) OTHER NON-CASH INCENTIVE COMPENSATION. As part of non-cash incentive
compensation for each of Fiscal 1992, Fiscal 1993 and Fiscal 1994, certain
Managing Directors, including all Senior Executives, also received awards of
units under the Capital Accumulation Plan. The value of units awarded to each
Managing Director was a fixed percentage of incentive compensation applied on
the same basis to all plan participants. The Capital Accumulation Plan provides
participation in certain investments that the Company has made directly or
indirectly in other entities. Awards under the Capital Accumulation Plan are
designed to foster cross-divisional cooperation, reduce the Company's holdings
of illiquid investments, and maximize the long-term value of these investments.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The amount of Total Reward that
could be paid to the Chief Executive Officer was established consistent with
the provisions of the performance criteria set in accordance with Section
162(m), as discussed above. In making the determination regarding the amount of
Total Reward to be awarded to the Chief Executive Officer for Fiscal 1994, the
Compensation Committee took into account the individual and Company performance
measures and policies described above. Specifically, the Committee took into
account the Chief Executive Officer's role in promoting the long-term strategic
growth of the Company during a period of difficult market conditions, including
the Company's focus on cross-divisional cooperation and continuing expansion
internationally. It noted that the Company's Fiscal 1994 financial performance
was not as favorable as performance in Fiscal 1993 and that the Company's
return on stockholders' equity decreased from 23.7% in Fiscal 1993 to 8.8% in
Fiscal 1994. In light of the foregoing, the Committee deemed it appropriate to
award the Chief Executive Officer incentive compensation in the form of cash
equal to $1,907,500; stock options in lieu of restricted stock units with a
value established by the Compensation Committee of $1,462,500 which, following
the application of a 40% discount to the fair market value of the Common Stock
used to determine the number of restricted stock units and multiplying the
resulting number of restricted stock units by 2.42, translated into 99,138
stock options; and an award of $155,000 under the Capital Accumulation Plan.
The amount of Total Reward paid to the Chief Executive Officer in connection
with Fiscal 1994 is approximately 53% below that awarded to him in Fiscal
1993.**
As noted above, with respect to amounts of base salary compensation paid to
the Chief Executive Officer for Fiscal 1994, the Compensation Committee in
early 1994 increased his base salary, taking into account his duties and
responsibilities, the longevity of his service to the Company and a comparison
of base salaries of chief executive officers of the Financial Services
Companies.
While the Committee intends to pursue a strategy of maximizing the
deductibility of compensation paid to executive officers for the 1995 and
future fiscal years, it also intends to maintain the flexibility to take
actions that it considers to be in the best interests of the Company and its
stockholders, and which may be based on considerations in addition to tax
deductibility. The Committee will review the performance program in effect for
the 1995 fiscal year and will determine at a subsequent date whether a similar
program, or some other program, will be appropriate for future fiscal years.
The Compensation Committee
Paul F. Oreffice, Chairman
S. Parker Gilbert
Allen E. Murray
- --------
** Based upon the Compensation Committee's valuation of Total Reward, stock-
based compensation and Capital Accumulation Plan units.
18
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee is composed of Messrs. Oreffice, Gilbert
and Murray, none of whom is, or during the previous year has been, an officer
or employee of the Company. Mr. Gilbert had been a senior executive officer of
the Company until his retirement in December 1990. See "Election of Directors".
During Fiscal 1994, no executive officer of the Company: (i) served as a
member of the compensation committee (or other board committee performing
similar functions or, in the absence of any such committee, the entire board of
directors) of another entity, one of whose executive officers served on the
Company's Compensation Committee; (ii) served as a director of another entity,
one of whose executive officers served on the Company's Compensation Committee;
or (iii) served as a member of the compensation committee (or other board
committee performing similar functions or, in the absence of any such
committee, the entire board of directors) of another entity, one of whose
executive officers served as a director of the Company.
19
<PAGE>
PERFORMANCE GRAPH
The line graph which follows charts the yearly percentage change in
cumulative stockholder return on an investment in the Company's Common Stock
(MS) against each of the Standard & Poor's 500 Index(R) (the "S&P 500(R)") and
the MSCI(R) Domestic Financial Services/Banking Group Index (the "MSCI(R)
Index"), a peer group index consisting of major financial services companies,
in each case, assuming an investment of $100 on January 31, 1990 (weighted on
the basis of market capitalization) and cumulation and reinvestment of all
dividends paid thereafter through January 31, 1995. The line graph is not
intended to be indicative of future stock performance.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG MORGAN STANLEY GROUP INC., S&P 500 INDEX
AND MSCI(R) DOMESTIC FINANCIAL SERVICES/BANKING GROUP INDEX
<CAPTION>
MORGAN
STANLEY
Measurement period GROUP S&P MSCI(R)
(Fiscal year Covered) INC. 500(R) Index
- --------------------- --------- --------- ---------
<S> <C> <C> <C>
Measurement PT - $ 100 $ 100 $ 100
01/90
FYE 01/91 $ 103 $ 108 $ 117
FYE 01/92 $ 199 $ 133 $ 189
FYE 01/93 $ 202 $ 147 $ 212
FYE 01/94 $ 288 $ 166 $ 291
FYE 01/95 $ 222 $ 167 $ 247
</TABLE>
- --------
(1) The MSCI(R) Index was constructed by Morgan Stanley Capital International,
the Company's global financial information database. The MSCI(R) Index
consists of the following companies: Bankers Trust New York Corporation,
The Bear Stearns Companies Inc., J.P. Morgan & Co. Incorporated, Merrill
Lynch & Co., Inc., Morgan Stanley Group Inc., Paine Webber Group Inc.,
Salomon Inc, and The Travelers Inc. American Express Company, which had
been included in the MSCI(R) Index in the Company's 1994 Proxy Statement,
distributed to its shareholders in 1994 its interest in Lehman Brothers
Holdings, Inc.; thus, American Express Company has been deleted from the
MSCI(R) Index because it is no longer engaged in the line of business for
which it was initially included.
20
<PAGE>
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, based on the recommendation of the Audit Committee,
has voted to continue to retain Ernst & Young LLP to serve as independent
auditors for the 1995 fiscal year and is submitting its selection of such firm
to the stockholders for ratification. If the selection is not ratified, the
Board of Directors will reconsider its selection. Ernst & Young LLP will have a
representative at the meeting who will be available to answer appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS
The Company will not consider any stockholder proposal for inclusion in the
1996 Annual Meeting of Stockholders' proxy materials unless received by the
Company no later than October 27, 1995.
OTHER MATTERS
At the date of this Proxy Statement, management has no knowledge of any
proposal other than that described herein that will be presented for
consideration at the meeting. In the event any other proposal is presented at
the meeting, it is intended that the persons named in the enclosed proxy will
have authority to vote such proxy in accordance with their judgment on such
proposal.
April 26, 1995
21
<PAGE>
Printed on Recycled Paper
LOGO
<PAGE>
P R O X Y - V O T I N G D I R E C T I V E
MORGAN STANLEY GROUP INC.
THIS PROXY/VOTING DIRECTIVE IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND RELATES TO THE ANNUAL MEETING OF STOCKHOLDERS, JUNE 8, 1995
For purposes of a preliminary vote and in accordance with and pursuant to
(i) Article IV, Section 4.1 of the Stockholders' Agreement dated as of
February 14, 1986 among Morgan Stanley Group Inc., a Delaware corporation (the
"Company"), and the persons listed on Appendix A thereto and/or (ii) Appendix
A to the Morgan Stanley Group Inc. 1986 Stock Option Plan and/or (iii)
Appendix A to the Morgan Stanley Group Inc. Performance Unit Plan and/or (iv)
Appendix A to the award agreements or certificates entered into pursuant to
the Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan and/or
(v) Exhibit B to the Trust Agreement (the "Trust Agreement") dated as of March
5, 1991 between the Company and State Street Bank and Trust Company, as
trustee (collectively, the "Voting Agreements"), the undersigned, being
subject to voting restrictions in one or more of such Voting Agreements, does
hereby (A) vote the shares of Common Stock of the Company held by the
undersigned which have been issued pursuant to, or are subject to, one or more
of the Voting Agreements (other than the number of such shares that
corresponds to the number of Stock Units awarded to the undersigned under the
Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan (the "Trust
Shares") and are held by the trustee referred to above (the "Trustee")) in
accordance with any instructions on the reverse side, and (B) instruct the
Trustee to vote Trust Shares in accordance with any instructions on the
reverse side.
With respect to shares of Common Stock (other than Trust Shares) of the
Company held by the undersigned which have been issued pursuant to, or are
subject to, one or more of the Voting Agreements (other than the Trust
Agreement), the undersigned hereby appoints Jonathan M. Clark and Philip N.
Duff, and each of them, attorneys and proxies of the undersigned, with full
power of substitution, to vote the number of such shares of Common Stock of
the Company which shares the undersigned has the power to vote at the Annual
Meeting of Stockholders of the Company to be held on June 8, 1995 at 1251
Avenue of the Americas, New York, New York, and at any adjournments thereof,
in accordance with the results of the preliminary vote referred to above
irrespective of the instructions on the reverse side and with the same effect
as though the undersigned were present in person and voting such shares. The
proxies are authorized in their discretion to vote upon such other business as
may properly come before the meeting.
I hereby agree that all power and authority hereby conferred is coupled with
an interest and is irrevocable and, to the extent not prohibited by law, shall
not be terminated by any act of the undersigned or by operation of law or by
the occurrence of any event whatsoever, including, without limitation, the
death, incapacity, dissolution, liquidation, termination, bankruptcy,
dissolution of marital relationship or insolvency of the undersigned or any
similar event. If, after the execution of this document, any such event shall
occur before the completion of the actions contemplated hereby, the above-
designated attorneys and Trustee are nevertheless authorized and directed to
complete all of such actions, to the extent required by the Voting Agreements.
In the event that the undersigned has executed this document but has not
indicated his vote on any of the proposals on the reverse, the number of his
shares subject to the Voting Agreements or held on his behalf will be voted in
favor of any such above proposal for purposes of the preliminary vote among
employee stockholders of the Company who are subject to one or more Voting
Agreements.
The validity, enforceability, interpretation and construction of the
foregoing shall be determined in accordance with the substantive laws of the
State of New York. THIS PROXY/VOTING DIRECTIVE IS IRREVOCABLE.
<PAGE>
[X] PLEASE MARK YOUR 0562
VOTE AS IN THIS
EXAMPLE.
THIS PROXY/VOTING DIRECTIVE WILL BE VOTED AS DIRECTED. IF THIS PROXY/VOTING
DIRECTIVE IS SIGNED AND RETURNED BUT NO DIRECTION IS MADE, SHARES OF COMMON
STOCK OTHER THAN TRUST SHARES WILL BE VOTED "FOR" ALL ITEMS SET FORTH BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
FOR WITHHELD
1. Election of Directors [_] [_]
Nominees: Richard B. Fisher, John J. Mack, Barton M. Biggs, Peter F. Karches,
Sir David A. Walker, Daniel B. Burke, Dick Cheney, S. Parker Gilbert, Allen E.
Murray, Paul F. Oreffice and Paul J. Rizzo.
FOR, except vote withheld from the following nominee(s)
- -------------------------------------------------------
2. Approval of the selection
of Ernst & Young LLP as FOR AGAINST ABSTAIN
independent auditors. [_] [_] [_]
SIGNATURE(S) DATED AS OF MAY 22, 1995
------------------------------------------
Please sign EXACTLY as name(s) appears hereon.
<PAGE>
P R O X Y - V O T I N G I N S T R U C T I O N
MORGAN STANLEY GROUP INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS, JUNE 8, 1995
The undersigned hereby appoints Jonathan M. Clark and Philip N. Duff, and each
of them, attorneys and proxies of the undersigned, with full power of
substitution, to vote the number of shares of common stock of the Company held
by the undersigned which shares the undersigned has power to vote at the
Annual Meeting of Stockholders to be held on June 8, 1995 at 1251 Avenue of
the Americas, New York, New York, and at any adjournments thereof, in
accordance with the instructions set forth in this Proxy and with the same
effect as though the undersigned were present in person and voting such
shares. The proxies are authorized in their discretion to vote upon such other
business as may properly come before the meeting.
With respect to shares of Common Stock of the Company allocated to my stock
account pursuant to the Equity Incentive Compensation Plan (the "EICP Stock"),
I, the undersigned, direct State Street Bank and Trust Company, as trustee
under the Trust Agreement dated as of April 1, 1994 (a) to vote such shares of
EICP Stock at the Annual Meeting and any adjournments thereof in accordance
with the directions set forth on the reverse side and (b) to grant a proxy to
Jonathan M. Clark or Philip N. Duff, giving them discretion to vote such
shares of EICP Stock in connection with such other business as may come before
the meeting. I understand that the trustee will not vote any allocated shares
of EICP Stock for which no instruction is received.
With respect to the shares of preferred stock ("ESOP Stock") of the Company
allocated to my stock account pursuant to the Morgan Stanley Group Inc. and
Subsidiaries Employee Stock Ownership Plan (the "ESOP Plan") and a proportion
of shares of ESOP Stock held in the trust which have not been allocated to
participants in the ESOP Plan, I, the undersigned, direct Northern Trust
Company, as trustee, (a) to vote such shares of ESOP Stock at the Annual
Meeting and any adjournments thereof in accordance with the directions set
forth on the reverse side and (b) to grant a proxy to Jonathan M. Clark or
Philip N. Duff, giving them discretion to vote such shares of ESOP Stock in
connection with such other business as may come before the meeting. I
understand that the trustee will not vote any allocated shares of ESOP Stock
for which no instruction is received.
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ACCOMPANYING ENVELOPE
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES
<PAGE>
[X] PLEASE MARK YOUR 0306
VOTE AS IN THIS
EXAMPLE.
THIS PROXY/VOTING INSTRUCTION WILL BE VOTED AS DIRECTED. IF THIS PROXY/VOTING
INSTRUCTION IS SIGNED AND RETURNED BUT NO DIRECTION IS MADE IT WILL BE VOTED
"FOR" ALL ITEMS SET FORTH BELOW. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
ITEMS 1 AND 2.
FOR WITHHELD
1. Election of Directors [_] [_]
Nominees: Richard B. Fisher, John J. Mack, Barton M. Biggs, Peter F. Karches,
Sir David A. Walker, Daniel B. Burke, Dick Cheney, S. Parker Gilbert, Allen E.
Murray, Paul F. Oreffice and Paul J. Rizzo.
FOR, except vote withheld from the following nominee(s)
- -------------------------------------------------------------------------------
2. Approval of the selection of
Ernst & Young LLP as independent FOR AGAINST ABSTAIN
auditors. [_] [_] [_]
SIGNATURE(S) ___________________________ DATED: __________
Please sign EXACTLY as name(s) appears hereon. Executors, administrators,
trustees, guardians or attorneys should so indicate when signing. If signing for
a corporation, please indicate your title.
<PAGE>
MORGAN STANLEY GROUP INC.
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
April 26, 1995
Dear Employee Stockholder:
As an employee of one of the subsidiaries of Morgan Stanley Group Inc. (the
"Company") and a party to the Stockholders' Agreement dated as of February 14,
1986 among the Company and the persons listed on Appendix A thereto and/or
similar agreements entered into pursuant to the grant of stock awards, stock
unit awards or option awards under the Company's 1988 Equity Incentive
Compensation Plan, stock options under the Company's 1986 Stock Option Plan
and/or performance units under the Company's Performance Unit Plan, you are
entitled to participate in a Preliminary Vote of certain of the Company's
employee stockholders concerning the matters to be voted on at the Company's
1995 Annual Meeting of Stockholders. The Preliminary Vote will be taken by
written consent dated as of Monday, May 22, 1995. A proxy/voting directive card
is enclosed to enable you to participate in the Preliminary Vote. The same card
serves as a directive to State Street Bank and Trust Company, as Trustee (the
"Trustee") of the Morgan Stanley Group Inc. "Rabbi" trust (the "Trust"),
instructing the Trustee how to vote the shares of Common Stock held on your
behalf in the Trust in the Preliminary Vote. The Trustee will vote such shares
at the Annual Meeting in accordance with the results of the Preliminary Vote.
The number of such shares corresponds to the number of stock units you received
as part of compensation.
Employees of the Company who are entitled to vote shares of the Company's
Common Stock that are subject to the voting restrictions described above in the
Preliminary Vote are required to grant irrevocable proxies voting their shares
of Common Stock subject to such agreements in accordance with the vote of the
majority of the shares voting in the Preliminary Vote on all matters submitted
to the Preliminary Vote and granting to Jonathan M. Clark or Philip N. Duff
authority to vote such shares of Common Stock in such person's discretion on
any other matter properly coming before the Annual Meeting. It is therefore
essential that you vote your shares of Common Stock subject to such voting
restrictions in the Preliminary Vote. After reading the enclosed Proxy
Statement, kindly complete, sign and promptly return the proxy/voting directive
card on or before May 22, 1995 in the enclosed envelope.
Once the Preliminary Vote has been completed, pursuant to the enclosed
proxy/voting directive card we will have your shares of Common Stock that are
subject to such voting restrictions voted at the Annual Meeting in accordance
with such results. Shares of Common Stock not subject to the Preliminary Vote
that are held by you on May 22, 1995 may be voted in your sole discretion,
following the procedures set forth in the following paragraph.
With respect to the shares of Morgan Stanley Group Inc. and Subsidiaries
Employee Stock Ownership Plan Convertible Preferred Stock ("ESOP Stock")
allocated to you, if any, or any shares of Common Stock owned by you that are
not subject to the Preliminary Vote, you should have already received a
separate mailing that includes a proxy/voting instruction card whereby you are
able to (i) direct Northern Trust Company, as Trustee of the ESOP, how to vote
shares of ESOP Stock at the Annual Meeting and (ii) vote the shares of Common
Stock that are not subject to the Preliminary Vote that are held by you. In the
separate mailing you will also find a letter to stockholders, a notice setting
forth the business expected to come before the Annual Meeting, the Proxy
Statement and a copy of the Company's 1994 Annual Report. Please refer to the
Proxy Statement for a description of the matters to be voted on in the
Preliminary Vote and at the Annual Meeting. If you have not received the
separate mailing, please contact Susan Krause in the Legal and Compliance
Department at (212) 703-5036.
<PAGE>
You are welcome to attend the Annual Meeting, which will be held on Thursday,
June 8, 1995 at 9:30 A.M. at 1251 Avenue of the Americas, 31st Floor, New York,
New York. You may also vote your shares of Common Stock that are not subject to
the Preliminary Vote in person at the Annual Meeting.
Very truly yours,
/s/ Richard B. Fisher
Richard B. Fisher
Chairman of the Board of Directors
/s/ John J. Mack
John J. Mack
President
