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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))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Morgan Stanley Group Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
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March , 1996
Dear ,
Morgan Stanley recently released its annual proxy statement. This year's proxy
seeks stockholder approval for a new ten-year stock compensation plan. We
believe that there are important points that should be considered when
evaluating the merits of the proposed plan. These points include:
. The proposed stock compensation plan is not a radical departure from past
practice. Morgan Stanley has actively used stock compensation since becoming
a public company in 1986. The current equity incentive compensation plan
replaces a plan that has been in effect since 1988. Under the prior plan,
stockholders approved authorizations equal to 33% and 34% of total shares
outstanding in 1989 and 1991, respectively. The proposed share authorization
of up to 91 million shares, or 59% of outstanding shares, has increased to
reflect the expected need for additional stock compensation as the Firm
continues to grow over the next ten years.
. Morgan Stanley uses stock compensation to ensure a meaningful level of
employee ownership. Currently, employees and directors own approximately 39%
of Morgan Stanley, the highest internal ownership amongst public US securities
firms. Morgan Stanley believes that the most effective way to manage its
business is to ensure that its employees, and especially its management, have
a meaningful ownership stake in the Firm. High internal ownership levels also
give management an appropriate interest in minimizing the dilutive effects of
stock compensation.
. Morgan Stanley has a history of minimizing dilution from stock compensation
through stock repurchases. While awarding stock-based compensation every
year, stock repurchases have limited the growth in average common and common
equivalent shares to an average rate of 1% per annum since 1986. This
dilution was clearly acceptable in the context of the 365%, or 16.8% per
annum, total return in Morgan Stanley common stock since 1986/1/
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/1/Source: Bloomberg, monthly total return with dividends reinvested between
3/31/86 and 2/29/96.
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. Stock awards are an integral part of officer compensation. Total
compensation for each officer is determined based on individual and Firm
performance as well as industry norms for the officer's position. A portion
of the officer's compensation is then paid in restricted stock-based awards.
These stock awards are in lieu of, not in addition to, cash compensation and
satisfy an accrued compensation expense on the balance sheet. Without stock
awards, this compensation expense would have been entirely satisfied with
cash.
. Morgan Stanley's use of stock compensation provides an internal source of
equity capital to support the Firm's growth. New equity from stock
compensation supports rapid balance sheet growth during capital intensive
business cycles. Balance sheet growth during these periods captures
incremental revenues and enhances Morgan Stanley's profitability.
Morgan Stanley believes its responsible use of stock compensation is critical to
the Firm's success. Stock awards ensure that employees have a stake in the
performance of Morgan Stanley common stock. Morgan Stanley believes that
maintaining an employee stake in the Firm will guarantee the ongoing alignment
of management and stockholder interests. Internal ownership also ensures that
management focuses on long-term value creation. Without the responsible use of
stock compensation, the benefits of managers operating as owners would be lost,
a prospect which Morgan Stanley believes would be detrimental to the interests
of employees and stockholders of Morgan Stanley.
Sincerely,
Charles B. Hintz
Treasurer
