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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:
[_]CONFIDENTIAL, FOR USE OF THE
[_]Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
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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):
[X]No fee required.
[_]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 ActRule 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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[_]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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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
LOGO
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
February 20, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Morgan Stanley, Dean Witter, Discover & Co. The meeting will be held on
Tuesday, March 24, 1998 at 2:00 PM at the Hyatt Regency Grand Cypress Hotel,
One Grand Cypress Boulevard, Orlando, Florida. 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 1997 Annual Report.
Whether or not you plan to attend the meeting in person, your shares should
be represented and voted at the meeting. 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. Returning the proxy will not preclude you from voting in
person at the meeting should you later decide to do so.
Your cooperation in promptly signing, dating and returning your proxy card
is greatly appreciated.
Very truly yours,
/s/ Philip J. Purcell /s/ John J. Mack
Philip J. Purcell John J. Mack
Chairman and Chief Executive President and Chief Operating
Officer Officer
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
----------------
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
February 20, 1998
The 1998 Annual Meeting of Stockholders of Morgan Stanley, Dean Witter,
Discover & Co. (the "Company") will be held at the Hyatt Regency Grand Cypress
Hotel, One Grand Cypress Boulevard, Orlando, Florida on Tuesday, March 24,
1998 at 2:00 PM for the following purposes:
1. To elect to the Board of Directors for a three-year term one class of
directors, consisting of four (4) directors.
2. To consider and vote upon the proposal to amend the Company's
Certificate of Incorporation to change the Company's name to "Morgan
Stanley Dean Witter & Co."
3. To ratify the selection of Deloitte & Touche llp as the Company's
independent auditors for the 1998 fiscal year.
4. To transact such other business as may properly come before the
meeting.
The record date for the determination of the stockholders entitled to vote
at the Annual Meeting, or any adjournments or postponements thereof, is the
close of business on January 26, 1998. Additional information regarding the
matters to be acted on at the Annual Meeting can be found in the accompanying
Proxy Statement.
By Order of the Board of Directors,
/s/ Christine A. Edwards
Christine A. Edwards
Executive Vice President,
Chief Legal Officer and Secretary
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE.
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
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PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
MARCH 24, 1998
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with a solicitation of
proxies by the Board of Directors of Morgan Stanley, Dean Witter, Discover &
Co., a Delaware corporation (the "Company"), to be used at the 1998 Annual
Meeting of Stockholders of the Company on Tuesday, March 24, 1998 at 2:00 PM
and at any adjournments or postponements of the Annual Meeting. The
approximate date on which this Proxy Statement and the accompanying form of
proxy are first being sent to stockholders is February 20, 1998.
Holders of the Company's Common Stock, par value $0.01 per share (the
"Common Stock"), as of the close of business on January 26, 1998 will be
entitled to vote at the Annual Meeting. On that date, there were 605,394,651
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
Annual Meeting. In addition, on January 26, 1998, there were 3,642,149
outstanding shares of the Company's ESOP Convertible Preferred Stock (the
"ESOP Stock"), each of which is entitled to 4.455 votes with respect to each
matter to be voted on at the Annual Meeting. Generally, 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 on
it. 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 an amendment (the "Name Change
Amendment") to the Company's Certificate of Incorporation changing the
Company's corporate name to "Morgan Stanley Dean Witter & Co.", FOR the
ratification of the appointment of Deloitte & Touche llp as independent
auditors of the Company for the 1998 fiscal year 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 executing 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 Executive Vice President, Chief
Legal Officer and Secretary of the Company, by subsequently filing another
proxy or by attending the Annual Meeting and voting in person. Merely
attending the Annual Meeting will not revoke your proxy.
Participants in the Dean Witter START Plan (Saving Today Affords Retirement
Tomorrow) (the "DW START") and the SPS Transaction Services, Inc. START Plan
(Saving Today Affords Retirement Tomorrow) (the "SPS START") may, on or before
March 19, 1998, instruct the trustee of the DW START and the SPS START as to
the voting of Common Stock in their accounts in the DW START and SPS START,
respectively. If timely voting instructions are not received, the trustee of
the DW START and SPS START will, subject to the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), vote all shares
for which timely instructions have not been received in direct proportion to
the voting of shares for which timely instructions are received. In addition,
participants in the Morgan Stanley, Dean Witter, Discover & Co. and
Subsidiaries Employee Stock Ownership Plan (the "ESOP") may, on or before
March 20, 1998, instruct the trustee of the ESOP as to the voting of ESOP
Stock allocated to their ESOP accounts. The ESOP trustee will, subject to the
requirements of ERISA, vote the ESOP Stock that is not allocated to
participant accounts in the same proportion as the allocated shares of ESOP
Stock for which voting instructions are received.
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The presence, in person or by proxy, of a majority of the combined voting
power of the outstanding shares of Common Stock and ESOP Stock shall
constitute a quorum for the transaction of business at the Annual Meeting. The
election of directors requires a plurality of the votes cast. The Name Change
Amendment requires the affirmative vote of a majority of the combined voting
power of the outstanding shares of Common Stock and ESOP Stock voting together
as a single class. The ratification of the appointment of Deloitte & Touche
llp as the Company's independent auditors requires the affirmative vote of a
majority of the combined voting power of the shares of Common Stock and ESOP
Stock represented at the Annual Meeting and entitled to vote thereon.
Abstentions may be specified on all proposals except the election of
directors. Abstentions will be counted as present for purposes of the item on
which the abstention is noted and, thus, have the effect of a vote against the
proposal. With regard to the election of directors, votes may be cast in favor
or withheld with respect to any or all nominees; votes that are withheld will
be excluded entirely from the vote and will have no effect. Under the rules of
the New York Stock Exchange, Inc. ("NYSE"), brokers who hold shares in street
name for customers have the authority to vote on certain items in the event
that they have not received instructions from beneficial owners. Brokers
(other than the Company's wholly owned subsidiaries, Morgan Stanley & Co.
Incorporated ("MS&Co.") and Dean Witter Reynolds Inc. ("DWR")) that do not
receive instructions are entitled to vote on the proposals presented in this
Proxy Statement. Under NYSE policy, if MS&Co. or DWR does not receive
instructions, each 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
each such proposal. In the event of a broker non-vote with respect to any
proposal coming before the Annual 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, with respect to
any issue requiring the affirmative vote of a majority of the voting power of
the shares represented at the Annual Meeting, 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 and, with
respect to any issue requiring the affirmative vote of a majority of the total
outstanding voting power of the Company, will have the practical effect of a
negative vote.
The Company will pay the expenses of the preparation of proxy materials and
the solicitation of proxies for the Annual Meeting. In addition to the
solicitation of proxies by mail, solicitation may be made by certain
directors, officers or employees of the Company by telephone or other means of
communication and by Georgeson & Company Inc. ("Georgeson"). Directors,
officers and employees will receive no additional compensation for such
solicitation, and Georgeson will receive a fee of $19,000 for its services.
The Company will reimburse brokers, including MS&Co. and DWR, and other
nominees for costs incurred by them in mailing proxy materials to beneficial
holders in accordance with the rules of the NYSE.
On May 31, 1997, Morgan Stanley Group Inc. ("Morgan Stanley Group") merged
with and into Dean Witter, Discover & Co. ("Dean Witter Discover") in a merger
of equals (the "Merger"). At that time, Dean Witter Discover changed its
corporate name to Morgan Stanley, Dean Witter, Discover & Co. References to
the Company include Dean Witter Discover prior to the Merger.
Prior to the Merger, Dean Witter Discover's fiscal year ended on December 31
and Morgan Stanley Group's fiscal year ended on November 30. After the Merger,
the Company adopted the fiscal year-end of November 30. As used herein,
"Fiscal 1997" refers to the twelve-month period from December 1, 1996 to
November 30, 1997; "Fiscal 1996" refers to the twelve-month period from
January 1, 1996 to December 31, 1996; and "Fiscal 1995" refers to the twelve-
month period from January 1, 1995 to December 31, 1995. All information
regarding the Common Stock has been adjusted to reflect the Company's stock
splits.
The Voting Agreements
Certain stockholders hold their shares of Common Stock subject to agreements
relating to, among other things, the voting and disposition of such shares.
Such agreements include a Stockholders' Agreement dated as of February 14,
1986, as amended (the "Stockholders' Agreement"), among Morgan Stanley Group
and those persons who were stockholders (the "Recapitalization Signatories")
of Morgan Stanley Group at that time (all of whom were Managing Directors or
Principals of MS&Co. at such time), certain agreements (the "MAS Agreements")
between Morgan Stanley Group and certain former general partners of Miller
Anderson &
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Sherrerd, LLP, and certain agreements (the "VKAC Agreements") between the
Company and certain senior officers of Van Kampen American Capital, Inc. Such
agreements also include various voting agreements (such agreements, together
with the Stockholders' Agreement, the MAS Agreements and the VKAC Agreements,
the "Voting Agreements") entered into by Morgan Stanley Group and the Company
with certain 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 certain grants to such
employees of stock awards, stock unit awards and/or option awards under the
1995 Equity Incentive Compensation Plan (the "1995 EICP") and the 1988 Equity
Incentive Compensation Plan (the "1988 EICP") and options and performance
units under other plans. Pursuant to the Merger, the Company succeeded to all
of the rights and obligations of Morgan Stanley Group under the Voting
Agreements. Shares of ESOP Stock are not subject to any of the Voting
Agreements.
The Voting Agreements, which will cease to have further effect on May 31,
2022, 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
or her shares of Common Stock subject to the Voting Agreements in such manner
as such Signatory may determine in his or her 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 must, if such Signatory desires to vote the Signatory's shares of Common
Stock that are subject to the Voting Agreements, vote such shares in
accordance with the vote of the majority of the shares of Common Stock voted
in the Preliminary Vote. In addition, a trustee for a trust that holds shares
of Common Stock corresponding to stock units awarded under the 1988 EICP or
the 1995 EICP (including any such stock units awarded to former employees who
do not participate in the Preliminary Vote) must vote the shares of Common
Stock that are in the trust in accordance with 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 shares of Common Stock in accordance with the vote of the majority of
the shares of Common Stock voted in the Preliminary Vote. At January 26, 1998,
80,642,355 shares of Common Stock (constituting approximately 12.97% of the
votes that are entitled to be cast at the Annual Meeting) were subject to
voting restrictions contained in the Voting Agreements. A Preliminary Vote
with respect to the proposals presented in this Proxy Statement will be taken
on or about March 12, 1998.
Except as otherwise determined by the Company's Board of Directors and
subject to applicable legal requirements, Recapitalization Signatories may
only dispose of or transfer in accordance with the terms of the Stockholders'
Agreement any shares of Common Stock they received in the Merger in exchange
for shares of the common stock of Morgan Stanley Group they acquired in
connection with the 1986 recapitalization of Morgan Stanley Group and certain
other shares. A Recapitalization Signatory's ability to dispose of such shares
depends upon his or her age and the amount of such shares of which he or she
has previously disposed. Restrictions on disposition are in effect only while
the Recapitalization Signatory remains an employee of the Company.
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ELECTION OF DIRECTORS
Introduction
The Board of Directors of the Company is divided into three classes. At each
annual meeting of the stockholders of the Company commencing with this Annual
Meeting, a class of directors shall be elected for a term expiring at the
third succeeding annual meeting of stockholders after their election, to
succeed that class of directors whose terms then expire. Each director shall
hold office until his or her successor has been duly elected and qualified, or
the director's earlier resignation, death or removal.
Based on the recommendation of its Nominating and Directors Committee, the
Board of Directors proposes the election as directors of the four persons
named below under "Nominees for Election to the Board of Directors For a
Three-Year Term Expiring in 2001," to hold office for a term ending at the
annual meeting of stockholders to be held in 2001. The Company has inquired of
each nominee and has ascertained that each will serve if elected. The
remaining ten directors named below will continue in office. While the Board
of Directors does not anticipate that any of the nominees will be unable to
stand for election as a director at the Annual Meeting, if that is the case,
proxies will be voted in favor of such other person or persons designated by
the Board of Directors.
All nominees are current directors of the Company. Set forth below is a
brief description of the background of the nominees for election as directors
and directors continuing in office.
Nominees for Election to the Board of Directors For a Three-Year Term Expiring
in 2001
ROBERT P. BAUMAN
Mr. Bauman, age 67, has been a director since May 1997 and served as a
director of Morgan Stanley Group from April 1996 to May 1997. Mr. Bauman has
been the non-executive Chairman of British Aerospace PLC since May 1994 and
the Deputy Chairman and non-executive director of BTR PLC, a manufacturing and
engineering business with global operations, since October 1997. He served as
Chief Executive Officer of SmithKline Beecham Plc from 1989 until April 1994.
Mr. Bauman is also a director of CIGNA Corporation and Union Pacific
Corporation. Mr. Bauman has been a non-executive director of Reuters Holdings
PLC since March 1994.
EDWARD A. BRENNAN
Mr. Brennan, age 64, has been a director since May 1997 and served as a
director of Dean Witter Discover from February 1993 to May 1997. Mr. Brennan
is the former Chairman of the Board, President and Chief Executive Officer of
Sears, Roebuck and Co. ("Sears"), having served in such capacities for more
than five years until his retirement in August 1995. Mr. Brennan is also a
director of AMR Corporation, Minnesota Mining and Manufacturing Company, The
Allstate Corporation ("Allstate"), Unicom Corporation, Dean Foods Company and
The SABRE Group Holdings, Inc.
DIANA D. BROOKS
Mrs. Brooks, age 47, has been a director since December 1997. Mrs. Brooks
has served since April 1994 as the President and Chief Executive Officer of
Sotheby's Holdings, Inc., parent company of the world-renowned auction house
with global operations. Previously, Mrs. Brooks served as President and Chief
Executive Officer of Sotheby's Worldwide from April 1993 to April 1994 and of
Sotheby's North America from November 1992 to April 1993.
CLARENCE B. ROGERS, JR.
Mr. Rogers, age 68, has been a director since May 1997 and served as a
director of Dean Witter Discover from February 1993 to May 1997. Mr. Rogers
has served since October 1992 as Chairman of the Board of
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Equifax Inc., a provider of information-based administrative services. Mr.
Rogers served as Chief Executive Officer of Equifax for more than five years
until December 1995. He is also a director of Sears, Briggs & Stratton
Corporation, Oxford Industries, Inc., ChoicePoint Inc. and Teleport
Communications Group, Inc.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION
OF ALL FOUR NOMINEES TO THE BOARD OF DIRECTORS.
Directors Continuing in Office -- Term Expiring in 1999
THOMAS C. SCHNEIDER
Mr. Schneider, age 60, has been Executive Vice President, Chief Strategic
and Administrative Officer and a director since May 1997 and served as
Executive Vice President and Chief Financial Officer of Dean Witter Discover
from 1987 to May 1997. Mr. Schneider is also Chairman of SPS Transaction
Services, Inc., a 74% owned indirect subsidiary of the Company ("SPSTSI").
RICHARD B. FISHER
Mr. Fisher, age 61, has been a director and Chairman of the Executive
Committee of the Board of Directors since May 1997. He served as Chairman of
the Board of Directors and Managing Director of Morgan Stanley Group from
January 1991 to May 1997 and as a Director of Morgan Stanley Group from July
1975 to December 1990. Mr. Fisher has served as Chairman of the Board of
Directors of MS&Co. since January 1991.
MILES L. MARSH
Mr. Marsh, age 50, has been a director since May 1997 and served as a
director of Dean Witter Discover from December 1996 to May 1997. Mr. Marsh has
served as Chairman and Chief Executive Officer of Fort James Corporation, a
manufacturer and marketer of consumer paper products, since August 1997, when
it was created upon the merger of Fort Howard Corporation and James River
Corporation of Virginia. From January 1996 until August 1997, he served as
Chairman of James River and was James River's President and Chief Executive
Officer from October 1995 until August 1997. From March 1991 to February 1995,
Mr. Marsh served as Chairman and Chief Executive Officer of Pet Inc., a
leading prepared foods company. Mr. Marsh is also a director of GATX
Corporation and Whirlpool Corporation.
LAURA D'ANDREA TYSON
Dr. Tyson, age 50, has been a director since May 1997 and served as a
director of Morgan Stanley Group from April 1997 to May 1997. Dr. Tyson has
been the Class of 1939 Professor of Economics and Business Administration at
the University of California, Berkeley since January 1997. Dr. Tyson served in
the first Clinton Administration from January 1993 through March 1995 as the
16th Chair of the White House Council of Economic Advisors, and from April
1995 through December 1996 as Chair of the President's National Economic
Council and the President's National Economic Advisor. She is also a director
of Ameritech Corporation and Eastman Kodak Company.
Directors Continuing in Office -- Term Expiring in 2000
PHILIP J. PURCELL
Mr. Purcell, age 54, has been Chairman of the Board and Chief Executive
Officer since May 1997 and served as Chairman of the Board and Chief Executive
Officer of Dean Witter Discover from 1986 to May 1997. Mr. Purcell is also a
director of SPSTSI and is a director or trustee of approximately 87 registered
investment companies for which Dean Witter InterCapital Inc., a wholly owned
subsidiary of the Company, serves as investment manager or investment adviser.
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JOHN J. MACK
Mr. Mack, age 53, has been President, Chief Operating Officer and a director
since May 1997 and served as President of Morgan Stanley Group from June 1993
to May 1997. From March 1992 until the Merger, he served as Chairman of the
Operating Committee of Morgan Stanley Group, which was responsible for
management of that corporation. Mr. Mack served as a director and a Managing
Director of Morgan Stanley Group from December 1987 to May 1997.
DANIEL B. BURKE
Mr. Burke, age 69, has been a director since May 1997 and served as a
director of Morgan Stanley Group from February 1994 to May 1997. He served as
Chief Executive Officer of Capital Cities/ABC, Inc. from 1990 until he retired
in February 1994. He also served as President and Chief Operating Officer of
that corporation from 1986 until February 1994 and was one of its directors
from 1967 until February 1996. Mr. Burke is also a director of Consolidated
Rail Corporation, Darden Restaurants, Inc., Rohm and Haas Company and The
Washington Post Company.
C. ROBERT KIDDER
Mr. Kidder, age 53, has been a director since May 1997 and served as a
director of Dean Witter Discover from July 1993 to May 1997. Mr. Kidder has
served since January 1995 as Chairman of the Board and Chief Executive Officer
of Borden, Inc., a consumer and specialty products company. He served from
August 1991 to October 1994 as Chairman and Chief Executive Officer of
Duracell International Inc., a consumer battery company. Mr. Kidder is also a
director of AEP Industries Inc. and Electronic Data Systems Corporation.
MICHAEL A. MILES
Mr. Miles, age 58, has been a director since May 1997 and served as director
of Dean Witter Discover from February 1993 to May 1994 and from January 1995
to May 1997. Mr. Miles has served since January 1995 as a special limited
partner in Forstmann Little & Company, a private investment firm with
interests in electronics, aerospace, publishing and other industries. From
September 1991 to July 1994, he was the Chairman of the Board and Chief
Executive Officer of Philip Morris Companies Inc., a holding company engaged
primarily in the manufacture and sale of various consumer products. He is also
a director of Sears, Allstate, Time Warner Inc. and Dell Computer Corporation.
ALLEN E. MURRAY
Mr. Murray, age 69, has been a director since May 1997 and served as a
director of Morgan Stanley Group from November 1992 to May 1997. Mr. Murray
served as Chairman of the Board of Directors and Chief Executive Officer of
Mobil Corporation from February 1986 until his retirement in 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 and Manufacturing
Company.
Board of Directors Meetings and Committees
The Board of Directors held eight (8) meetings during Fiscal 1997. The
Company has standing Audit, Compensation and Nominating and Directors
Committees.
The Audit Committee, among other things, confers with the Company's
independent auditors and internal auditors concerning their respective audits
and reviews the accounting principles employed in financial reporting. Messrs.
Brennan (Chair), Kidder and Murray and Dr. Tyson are the members of the Audit
Committee. Prior to the Merger, Dean Witter Discover's Board of Directors had
an Audit Committee with substantially similar
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responsibilities, the members of which were Mr. Alfred C. DeCrane, Ms. Nancy
Kassebaum Baker, Mrs. Sybil A. Mobley and Mr. Rogers. The Audit Committee held
two (2) meetings and the Dean Witter Discover Audit Committee held two (2)
meetings during Fiscal 1997.
The Compensation Committee, among other things, 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 questions of interpretation,
administration and application of the Company's employee benefit plans. The
members of the Compensation Committee are Messrs. Burke (Chair), Brennan,
Murray and Rogers. Prior to the Merger, Dean Witter Discover's Board of
Directors had a Compensation Committee with substantially similar
responsibilities, the members of which were Messrs. Brennan, Rogers, Kidder
and Miles. During Fiscal 1997, the Compensation Committee held two (2)
meetings and the Dean Witter Discover Compensation Committee held one (1)
meeting.
The Nominating and Directors Committee, among other things, evaluates and
recommends candidates for election to the Company's Board of Directors and
assesses the Board of Directors' performance not less frequently than every
three (3) years, recommends director compensation and benefits philosophy and
periodically reviews the Company's corporate governance profile. Messrs. Miles
(Chair), Bauman, Burke and Marsh are the members of the Nominating and
Directors Committee. Prior to the Merger, Dean Witter Discover's Board of
Directors had a Directors Committee with substantially similar
responsibilities, the members of which were Messrs. Miles, Robert M. Gardiner
and Kidder. The Nominating and Directors Committee held one (1) meeting and
the Dean Witter Discover Directors Committee did not meet during Fiscal 1997.
The Company's current Bylaws include provisions setting forth specific
conditions under which persons may be nominated as directors of the Company at
an annual meeting of stockholders. A copy of such provision is available upon
request to the Company's Executive Vice President, Chief Legal Officer and
Secretary, 1585 Broadway, New York, New York 10036.
During Fiscal 1997, each of the current directors attended at least seventy-
five percent (75%) of the meetings of the Board of Directors and the
Committees on which he or she served (during the period that he or she served)
except Mr. Murray and Dr. Tyson, each of whom became a director of the Company
upon consummation of the Merger. Mr. Murray attended two of three Board of
Directors meetings held after the Merger and one of two meetings held after
the Merger by each of the Audit Committee and Compensation Committee. Dr.
Tyson, who did not serve on any committees during Fiscal 1997, attended two of
three meetings of the Board held after the Merger and became a member of the
Audit Committee in December 1997.
Director Compensation
Directors who are not employees of the Company or a Company affiliate ("Non-
Employee Directors") receive annual cash retainers and meeting fees as
follows:
<TABLE>
<S> <C>
Board Member.................................................... $35,000
Committee Chair................................................. 7,500
Committee Member................................................ 5,000
Attendance at Board or Committee Meeting........................ 1,000
</TABLE>
Non-Employee Directors also participate in the Company's Directors' Equity
Capital Accumulation Plan ("DECAP"). Under DECAP, Non-Employee Directors
receive formula-based awards of stock options covering 4,000 shares of Common
Stock and a grant of 600 shares of Common Stock upon initially joining the
Board of Directors and after each annual meeting of stockholders after which
they continue to serve. DECAP further provides that each Non-Employee Director
may elect to receive all or a portion of his or her annual cash retainers and
meeting fees, on a current or deferred basis, in shares of Common Stock at a
fair market value equal to the cash retainers or fees that would otherwise
have been paid and may elect to defer receipt of formula-based Common Stock
grants. Each Non-Employee Director also may elect under DECAP to receive
options to purchase Common Stock in lieu of that director's annual $35,000
retainer. If a Non-Employee Director makes
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this election, the number of shares of Common Stock subject to each such
option will be equal to the number of whole shares of Common Stock obtained by
multiplying three by the quotient obtained by dividing $35,000 by the fair
market value of a share of Common Stock on the award date. Non-Employee
Directors are not eligible to receive retirement benefits from the Company.
The Company matches certain charitable gifts to educational institutions
made by Non-Employee Directors up to a maximum of $2,000 per year. During
Fiscal 1997, the Company matched charitable gifts in the amount of $2,000 each
on behalf of Mr. Rogers and Mr. Gardiner.
Directors who are also employees of the Company or an affiliate are not
entitled to any compensation for serving as a director of the Company.
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<PAGE>
STOCK OWNERSHIP
Stock Ownership of Management
The following table sets forth, as of January 26, 1998, the beneficial
ownership of the Company's capital stock and the common stock of SPSTSI, par
value $.01 per share (the "SPS Common Stock"), by current directors, nominees
for director, the Chief Executive Officer, each of the four other named
executive officers, and all directors and executive officers of the Company as
a group.
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY
OWNED(/1/)
-------------------------
COMPANY SPS
COMMON STOCK COMMON STOCK
------------ ------------
NAME OF BENEFICIAL OWNER
- ------------------------
<S> <C> <C>
Philip J. Purcell(/2/)(/3/)(/5/)(/7/)(/8/)......... 2,656,586 22,052(/6/)
John J. Mack(/2/)(/3/)(/4/)(/9/)................... 3,691,434 --
Thomas C. Schneider(/2/)(/3/)(/7)/(/8/)............ 1,116,667 1,002
Richard B. Fisher(/2/)(/3/)(/4/)(/9/).............. 6,246,737 --
Robert P. Bauman(/10/)............................. 7,018 --
Edward A. Brennan(/11/)(/12/)...................... 134,007 --
Diana D. Brooks.................................... 600 --
Daniel B. Burke(/10/).............................. 10,210 --
C. Robert Kidder(/12/)............................. 22,600 --
Miles L. Marsh(/13/)............................... 11,000 --
Michael A. Miles(/12/)............................. 29,394 --
Allen E. Murray(/10/).............................. 17,315 --
Clarence B. Rogers, Jr.(/12/)...................... 29,186 --
Laura D'Andrea Tyson(/10/)......................... 4,708 --
Christine A. Edwards(/2/)(/3/)(/7/)(/8/)........... 571,976 2,002
Robert G. Scott(/2/)(/3/)(/4/)(/9/)................ 1,493,310 --
All executive officers and directors as a group (16
persons)(/2/)(/3/)(/4/)(/14/)..................... 16,042,748 25,056
</TABLE>
- --------
(1) In each case, less than 1% of the shares outstanding based on 605,394,651
shares of the Company's Common Stock and 27,206,883 shares of SPS Common
Stock, except that Mr. Fisher and all officers and directors as a group
beneficially own approximately 1.03% and 2.65%, respectively, of the
Company's Common Stock.
(2) Except as otherwise disclosed below, the voting and disposition of the
shares of Common Stock beneficially owned by the executive officers and
Mr. Fisher are subject to the Voting Agreements. See "INTRODUCTION--The
Voting Agreements."
(3) Includes 56,055, 697,710, 10,834, 676,886, 9,771, 395,255 and 1,846,511
shares of Common Stock underlying stock unit awards granted to Mr.
Purcell, Mr. Mack, Mr. Schneider, Mr. Fisher, Mrs. Edwards, Mr. Scott and
all current directors and executive officers as a group, respectively, as
part of compensation pursuant to the 1995 EICP and the 1988 EICP. 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 4,830, 4,830, 4,830 and 14,490 shares of Common Stock into which
shares of ESOP Stock are convertible that have been allocated to Messrs.
Mack, Fisher, Scott and all current directors and executive officers as a
group, respectively. Each share of ESOP Stock is convertible into 3.3
shares of Common Stock. Each share of ESOP Stock is entitled to 4.455
votes with respect to each matter to be voted on at the 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.
(5) Includes 22,605 shares of Common Stock owned by Mr. Purcell's spouse and
11,269 shares held in custodial accounts on behalf of Mr. Purcell's
children for which he is custodian, as to which Mr. Purcell disclaims
beneficial ownership.
(6) Includes 2,050 shares of SPS Common Stock held in custodial accounts on
behalf of Mr. Purcell's children for which he is custodian, as to which
Mr. Purcell disclaims beneficial ownership.
(7) Includes 1,192,794, 616,489 and 222,833 shares of Common Stock
beneficially held by Mr. Purcell, Mr. Schneider and Mrs. Edwards,
respectively, that are not subject to the Voting Agreements.
(8) Includes 1,407,737, 489,344 and 339,372 shares of Common Stock subject to
options that are exercisable within 60 days after January 26, 1998 held
by Mr. Purcell, Mr. Schneider and Mrs. Edwards, respectively, none of
which will be subject to the Voting Agreements.
(9) Includes 289,464, 282,331 and 100,366 shares of Common Stock subject to
options that are exercisable within 60 days after January 26, 1998 held
by Mr. Mack, Mr. Fisher, and Mr. Scott, respectively, all of which will
be subject to the Voting Agreements.
9
<PAGE>
(10) Includes 4,000 shares of Common Stock subject to options that are
exercisable within 60 days after January 26, 1998.
(11) Includes 15,534 shares of Common Stock owned by Mr. Brennan's spouse as
to which he has indirect investment and voting control.
(12) Includes 20,000 shares of Common Stock subject to options that are
exercisable within 60 days after January 26, 1998.
(13) Includes 8,000 shares of Common Stock subject to options that are
exercisable within 60 days after January 26, 1998.
(14) Includes 2,234,054 shares of Common Stock that are not subject to the
Voting Agreements. Includes 3,012,614 shares of Common Stock subject to
options that are exercisable within 60 days after January 26, 1998, of
which 2,340,453 shares will not be subject to the Voting Agreements.
Principal Stockholders
The following table sets forth certain information regarding each person or
group of persons known to the Company as of January 26, 1998 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 Agree-
ments(/1/)...................... 100,269,868(/2/)(/3/)(/4/)(/5/) 16.56
</TABLE>
- --------
(1) The voting of the shares of Common Stock subject to the Voting Agreements
is subject to the restrictions on voting contained therein. The
information provided relates to the voting power of such securities. The
Signatories to the Voting Agreements do not share dispositive power. See
"INTRODUCTION--The Voting Agreements."
(2) Includes 20,890,218 shares of Common Stock that may be acquired upon the
exercise of options that are exercisable within 60 days after January 26,
1998. Of these shares, 3,045,392 will not be subject to the Voting
Agreements.
(3) Includes 41,543,138 shares of Common Stock, underlying stock unit awards
granted pursuant to the 1995 EICP and the 1988 EICP, that will be voted in
accordance with the results of the Preliminary Vote.
(4) Includes 4,517,266 shares of Common Stock that are not subject to the
Voting Agreements.
(5) Does not include 562,587 shares of Common Stock into which shares of ESOP
Stock allocated to the Signatories are convertible. Each share of ESOP
Stock is convertible into 3.3 shares of Common Stock. Each share of ESOP
Stock is entitled to 4.455 votes with respect to each matter to be voted
on at the Annual Meeting. Such shares are not subject to the Voting
Agreements.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table summarizes the compensation paid by the Company and its
subsidiaries to the Chief Executive Officer and the Company's four other most
highly compensated executive officers who were serving as executive officers
at November 30, 1997 (the "named executive officers") for services rendered in
all capacities to the Company and its subsidiaries for Fiscal 1997, Fiscal
1996 and Fiscal 1995. Amounts reported for Messrs. Mack and Scott include
compensation received from Morgan Stanley Group prior to the Merger.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------------- -----------------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING
PRINCIPAL FISCAL COMPENSATION AWARD(S) OPTIONS/
POSITION YEAR(/1/) SALARY($)(/2/) BONUS($)(/2/) ($) ($) SARS(#)
- --------- --------- -------------- ------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Philip J. 1997 $775,000(/3/) $9,698,750 $799,996(/4/) $3,135,577(/5/) 126,126(/6/)
Purcell 330,000(/7/)
Chairman of the 663,875(/8/)
Board ---------
and Chief 1,120,001
Executive
Officer
1996 750,000 2,560,000 -- 895,405(/10/) --
1995 725,000 2,240,000 -- 705,576(/10/) 850,000(/11/)
John J. Mack 1997 $775,000 $9,698,750 -- $3,135,577(/5/) 126,126(/6/)
President and 1996 550,000 5,771,875(/13/) -- 4,154,366(/14/) 299,636(/15/)
Chief 1995 456,575 4,140,308(/13/) -- 2,046,186(/14/) --
Operating
Officer
Robert G. Scott 1997 $300,000 $4,956,875 -- $1,553,944(/5/) 62,505(/6/)
Executive Vice 206,304(/17/)
President and ---------
Chief Financial 268,809
Officer*
Thomas C. 1997 $345,000(/3/) $2,115,125 -- $ 606,027(/5/) 24,378(/6/)
Schneider 120,000(/7/)
Executive Vice 446,874(/8/)
President and 137,536(/17/)
Chief Strategic ---------
and 728,788
Administrative
Officer
1996 335,000 892,000 149,861(/4/) 311,993(/10/) --
1995 325,000 788,000 -- 248,211(/10/) 300,000(/11/)
Christine A. 1997 $270,000(/3/) $1,936,925 -- $ 546,565(/5/) 21,987(/6/)
Edwards 100,000(/7/)
Executive Vice 83,869(/8/)
President, 137,536(/17/)
Chief Legal ---------
Officer and 343,392
Secretary
1996 255,000 560,000 -- 195,870(/10/) --
1995 245,000 492,000 -- 154,975(/10/) 240,000(/11/)
<CAPTION>
NAME AND
PRINCIPAL ALL OTHER
POSITION COMPENSATION
- --------- ------------------
<S> <C>
Philip J. $ 3,731(/9/)
Purcell
Chairman of the
Board
and Chief
Executive
Officer
3,633(/9/)
4,902(/9/)
John J. Mack $25,500(/12/)
President and 19,650(/16/)
Chief 15,150(/16/)
Operating
Officer
Robert G. Scott $25,500(/12/)
Executive Vice
President and
Chief Financial
Officer*
Thomas C. $ 3,731(/9/)
Schneider
Executive Vice
President and
Chief Strategic
and
Administrative
Officer
3,633(/9/)
4,902(/9/)
Christine A. $ 3,731(/9/)
Edwards
Executive Vice
President,
Chief Legal
Officer and
Secretary
3,633(/9/)
4,902(/9/)
</TABLE>
- --------
* Not an executive officer of Morgan Stanley Group or Dean Witter Discover
prior to the Merger.
(1) Information for Mr. Mack for Fiscal Year 1996 and Fiscal Year 1995 is
presented based on the fiscal year of Morgan Stanley Group prior to the
Merger: Fiscal Year 1996 included the 12-month period from December 1,
1995 to November 30, 1996, and Fiscal Year 1995 included the 10-month
period from February 1, 1995 to November 30, 1995.
(2) Includes amounts contributed to various deferred compensation plans of
the Company.
(3) Due to the Company's change in fiscal year, the amount reported for
Fiscal 1997 for Mr. Purcell, Mr. Schneider and Mrs. Edwards includes
salary for the month of December 1996, approximately $62,500, $27,917 and
$21,250, respectively, that is also included in the amount reported for
Fiscal 1996.
(4) Payments received upon the exercise of options pursuant to tax benefit
rights granted in connection with such options. The tax benefit rights
entitled the optionee to an amount equal to the amount of compensation
realized upon the exercise of the option multiplied by the then
applicable federal corporate income tax rate.
11
<PAGE>
(5) The market value of the Common Stock underlying vested and unvested
restricted stock units (which generally convert into shares of Common
Stock) ("RSUs") at the date of grant, without taking into account any
diminution in value attributable to the restrictions on such RSUs. Awards
of RSUs were granted under the 1995 EICP on December 12, 1997 for
performance in Fiscal 1997; the closing price per share of the Common
Stock on that date as reported on the New York Stock Exchange Composite
Transaction Tape (the "NYSE Composite Tape") was $55.9375 per share.
Seventy-five percent of the RSUs will vest ratably over three years
beginning January 2, 1999; the remaining 25% will vest in five equal annual
installments beginning January 2, 1999. Dividend equivalents are paid on
these RSUs at the same rate that dividends are paid on shares of Common
Stock. The RSUs are neither distributed in the form of shares of Common
Stock nor transferable for five years after the grant date and are subject
to forfeiture in certain circumstances. The RSUs provide that in the event
a "change in control" of the Company occurs or the recipient terminates
employment with the Company as a result of a "full career retirement," all
such RSUs will vest.
The aggregate number of RSUs (including RSUs awarded on December 12, 1997,
TDEPP Units (as defined in footnote 10 below) and RSUs awarded prior to the
years reported) and the market value ascribed thereto as of November 30,
1997 owned by each of the named executive officers is as follows: Mr.
Purcell--146,993 ($7,983,594); Mr. Mack--697,710 ($37,894,374); Mr. Scott--
395,255 ($21,467,287); Mr. Schneider--43,192 ($2,345,886); and Mrs.
Edwards--30,106 ($1,635,150). The value ascribed to RSUs and TDEPP units
has been reported based on the value of the Common Stock at fiscal year
end, in accordance with SEC rules. The value ascribed to RSUs awarded in
respect of Fiscal 1997 by the Compensation Committee differs from the
amounts reported herein. For a discussion of the differences between the
value ascribed to such RSUs pursuant to SEC rules and the values ascribed
by the Compensation Committee to such RSUs, see "COMPENSATION OF EXECUTIVE
OFFICERS--Report of the Compensation Committees on Executive Compensation."
(6) Awards under the 1995 EICP of stock options for services performed in
Fiscal 1997. These options provide that in the event a "change of
control" of the Company occurs or the recipient terminates employment
with the Company as a result of a "full career retirement," any unvested
portion of the award will immediately vest and become exercisable.
Restoration Option Rights ("RORs") were granted with respect to such
options. An ROR entitles the grantee in respect of an underlying option
(an "Underlying Option"), upon exercise of such Underlying Option at a
time when the grantee is an employee of the Company or a related
employer, and upon tendering shares of Common Stock to the Company in
satisfaction of the exercise price of such Underlying Option, to the
automatic grant of an additional option (a "Restoration Option") to
acquire the number of shares of Common Stock equal to the number of
shares of Common Stock delivered to pay the exercise price of the
Underlying Option, and delivered or withheld to pay taxes owed as a
result of such exercise, at a per share price equal to the closing price
of a share of Common Stock as reported on the NYSE Composite Tape on the
exercise date of such Underlying Option.
(7) Awards of stock options made before the Merger by Dean Witter Discover
during Fiscal 1997, consistent with historic Dean Witter Discover
compensation practices. These options provide that in the event of a
"change in control" of the Company, any unvested portion of the award
will immediately vest and become exercisable. The Merger did not
constitute a "change in control" for purposes of these options. RORs were
granted with respect to such options.
(8) Restoration Options granted during Fiscal 1997 upon exercise of RORs.
(9) The Company's matching contribution under the DW START.
(10) The market value at the date of grant of the Common Stock underlying
vested and unvested awards of restricted stock units ("TDEPP Units") made
under the Company's Tax Deferred Equity Participation Plan ("TDEPP") for
Fiscal 1996 and Fiscal 1995, without taking into account any diminution
in value attributable to restrictions on such TDEPP Units. The awards
were made on January 17, 1997 and January 19, 1996, respectively. The
closing prices per share of the Common Stock as reported on the NYSE
Composite Tape for such dates were $35.50 and $25.625, respectively.
TDEPP Units vest two years after the award date and are payable in Common
Stock five years after the award date. TDEPP Units also provide that in the
event of a "change in control" of the Company, the vesting and distribution
of such awards will be accelerated. The Merger did not constitute a "change
in control" for purposes of TDEPP Units. Dividend equivalents are allocated
to the account of each holder of TDEPP Units on all such Units at the same
rate that dividends are paid on shares of Common Stock. TDEPP Units may not
be disposed of or encumbered prior to the lapse of restrictions on
transferability and are subject to forfeiture under certain circumstances.
(11) Awards of stock options made by Dean Witter Discover during Fiscal 1995.
These options provide that in the event of a "change in control" of Dean
Witter Discover, any unvested portion of an award would immediately vest
and become exercisable. The Merger constituted a "change in control" for
these purposes.
(12) The Company's contributions for Fiscal 1997 to the Deferred Profit
Sharing Plan ("DPSP") and the ESOP. The Company contributed 50.2% of such
amount to the DPSP and 49.8% to the ESOP.
(13) Includes amounts representing annual cash bonus and the value of units
awarded pursuant to the 1988 Capital Accumulation Plan, a plan that
provides participation in certain investments that the Company has made
directly or indirectly in other entities.
(14) The market value at the date of grant of the common stock of Morgan
Stanley Group underlying vested and unvested awards of RSUs made by
Morgan Stanley Group in Fiscal Year 1996 and Fiscal Year 1995 for
performance in each such year, without taking into account any diminution
in value attributable to restrictions on each RSU. The market value of
such awards has been calculated based
12
<PAGE>
upon the closing price of the common stock of Morgan Stanley Group on the
date the awards were made. 75% of the RSUs awarded for Fiscal 1996 vested
upon grant; the remaining 25% vest in five equal annual installments. 60%
of the RSUs awarded for 1995 vested upon grant; the remaining 40% vest in
ten equal annual installments. Dividend equivalents are paid on these RSUs
(including unvested units) at the same rate that dividends are paid on
shares of Common Stock. These RSUs are subject to forfeiture under certain
circumstances and are neither distributed in the form of shares of Common
Stock nor transferable for five years and ten years, respectively, after
the date of grant, except that if the recipient terminates employment with
the Company as a result of a "full career retirement," the RSUs awarded for
Fiscal 1996 will vest and the recipient of RSUs awarded for Fiscal 1995 may
choose to receive the Common Stock underlying vested RSUs upon such
termination of employment.
(15) Awards of stock options made by Morgan Stanley Group to certain key
employees, including Mr. Mack, considered supplemental to year-end
compensation. 20% of these options vest annually from 1998 through 2000;
the remaining 40% will vest in 2001. The options become exercisable upon
vesting and expire on February 26, 2003. The numbers of shares of Common
Stock underlying the options reflect adjustment of the options pursuant
to the Merger to give effect to the conversion terms of the Merger. The
options, whether vested or unvested, may not be sold, assigned,
exchanged, pledged, hypothecated or otherwise disposed of or encumbered
and are subject to forfeiture under certain circumstances.
(16) Contributions by Morgan Stanley Group to the DPSP and the ESOP. For
amounts reported for Fiscal 1996, Morgan Stanley Group contributed 39% to
the DPSP and 61% to the ESOP. For amounts reported for Fiscal 1995,
Morgan Stanley Group contributed 21% to the DPSP and 79% to the ESOP.
(17) Awards of stock options made on June 27, 1997 to certain key employees to
address special equity, retention or pay transition issues related to the
Merger. These options provide that in the event of a "change in control"
of the Company, any unvested portion of the award will immediately vest
and become exercisable. RORs were granted with respect to such options.
Compensation to employees who are not executive officers of the Company may
exceed compensation paid to the named executive officers.
13
<PAGE>
Stock Options
The table below provides information concerning stock options granted to the
named executive officers during Fiscal 1997 (giving effect to awards of stock
options on December 12, 1997 for services performed in Fiscal 1997).
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING PERCENT OF
OPTIONS TOTAL OPTIONS GRANT
GRANTED(#) GRANTED TO DATE
--------------------- EMPLOYEES EXERCISE PRESENT
IN FISCAL PRICE EXPIRATION VALUE
NAME NON-ROR ROR(/1/) YEAR ($/SH) DATE ($)(/2/)
---- ------- -------- ------------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Philip J. Purcell....... 330,000(/3/) 1.64 35.50 1/16/07 3,717,450
42,587 0.21 43.0625 10/29/99 373,914
12,311 0.06 43.0625 1/31/01 139,114
86,717 0.43 43.0625 9/30/02 1,203,632
26,106 0.13 43.0625 1/31/03 374,099
496,154 2.46 43.0625 2/21/03 7,149,579
126,126(/4/) 0.63 53.83 1/02/08 2,262,700
John J. Mack............ 126,126(/4/) 0.63 53.83 1/02/08 2,262,700
Robert G. Scott......... 206,304(/5/) 1.02 43.6250 6/26/07 3,012,038
62,505(/4/) 0.31 53.83 1/02/08 1,121,340
Thomas C. Schneider..... 120,000(/3/) 0.60 35.50 1/16/07 1,352,400
137,536(/5/) 0.68 43.6250 6/26/07 2,007,338
16,197 0.08 43.0625 10/29/99 142,210
5,733 0.03 43.0625 1/31/01 64,783
29,365 0.15 43.0625 1/31/03 420,800
194,278 0.96 43.0625 2/21/03 2,799,546
52,576 0.26 43.0625 1/19/05 887,483
148,725 0.74 48.6250 1/19/05 2,815,364
24,378(/4/) 0.12 53.83 1/02/08 437,341
Christine A. Edwards.... 100,000(/3/) 0.50 35.50 1/16/07 1,126,500
137,536(/5/) 0.68 43.6250 6/26/07 2,007,338
3,346 0.02 43.0625 10/29/99 29,378
1,465 0.01 43.0625 1/31/01 16,555
1,134 0.01 43.0625 9/30/02 15,740
4,078 0.02 43.0625 1/31/03 58,438
73,846 0.37 43.0625 2/21/03 1,064,121
21,987(/4/) 0.11 53.83 1/02/08 394,447
</TABLE>
- --------
(1) Restoration Options received upon the exercise of RORs. Each such option is
vested upon grant and has the same expiration date and transferability
provisions as its Underlying Option. All of the Restoration Options listed
were granted on June 30, 1997, the date of exercise of the Underlying
Options, except that the 148,725 Restoration Options granted to Mr.
Schneider expiring January 19, 2005 were granted on July 29, 1997, the date
of exercise of the Underlying Option respecting such Restoration Options.
(2) Except as otherwise noted in footnote 4, options are valued using a modified
Black-Scholes option pricing model. The following assumptions were used in
employing the model: the risk-free rate of return was the average continuous
yield, calculated over the ten-day period preceding the grant date, of a
zero coupon U.S. Treasury Bond having a remaining term equal to the subject
option; the Company's annualized dividend yield during the month preceding
the grant date was assumed to be constant over the life of the option;
option life was assumed to be equal to the term of the option, assuming
exercise at the end of the option term; and stock price volatility was
calculated based on the daily price volatility of the Common Stock for the
one-year period prior to the grant date (for the period prior to the Merger,
the volatility was determined based on an index (the "Pre-Merger Index") of
the common stock of Dean Witter
14
<PAGE>
Discover and Morgan Stanley Group which, consistent with the ratio at which
shares of Morgan Stanley Group common stock were exchanged for Dean Witter
Discover common stock in connection with the Merger, included 1.65 shares of
Morgan Stanley Group common stock for each share of Dean Witter Discover
common stock). A discount of 25% was applied to reflect the vesting
requirements of the options and the restrictions on the transferability of
the underlying Common Stock, except that no discount was applied in the case
of Restoration Options. The hypothetical values are presented pursuant to
SEC rules and there is no assurance that such values will be realized. The
actual amount, if any, realized upon the exercise of stock options will
depend upon the market price of the Common Stock relative to the exercise
price of the stock option at the time it is exercised.
(3) Awards made before the Merger by Dean Witter Discover during Fiscal 1997,
consistent with historic Dean Witter Discover compensation practices. The
exercise price of these options is the closing price of a share of Common
Stock as reported on the NYSE Composite Tape on January 17, 1997, the award
date. Such stock options vest and become exercisable in three equal
installments on January 17, 1998, 1999 and 2000, except that any
unexercisable portion of such grant shall become immediately exercisable
upon the occurrence of a "change in control" of the Company. The Merger did
not constitute a "change in control" for purposes of these grants. RORs were
granted with respect to these options. The options are not transferable,
except that all or any part of the options, but not any RORs, are
transferable once during the option holder's lifetime to the option holder's
spouse or other immediate family member or a trust for the exclusive benefit
of one or more such persons.
(4) Awards under the 1995 EICP for services performed in Fiscal 1997. Seventy-
five percent of the options vest ratably over three years, beginning January
2, 1999; the remaining 25% vest ratably over five years, beginning January
2, 1999. These options, which are exercisable upon vesting, are not
transferable and are subject to forfeiture under certain circumstances.
Shares of Common Stock acquired upon the exercise of such options generally
may not be transferred or sold prior to January 1, 2003, except to the
extent required to cover the exercise price and tax liability arising upon
exercise. The stock options provide that if a "change in control" of the
Company occurs or the recipient terminates employment with the Company as a
result of a "full career retirement," any unvested portion of the award will
vest and become exercisable and all shares of Common Stock acquired upon
exercise of such options will no longer be subject to restrictions on
transfer. RORs were granted with respect to these options. The Compensation
Committee approved the grant on December 12, 1997 with an exercise price,
determined pursuant to its authority under the 1995 EICP, equal to the
average of the closing prices of a share of Common Stock, as reported on the
NYSE Composite Tape, for the last seven trading days of Fiscal 1997. These
options are valued using a modified Black-Scholes option pricing model. The
following assumptions were used in employing the model: the risk-free rate
of return was the average continuous yield, calculated over the last seven
trading days of Fiscal 1997, of a zero coupon U.S. Treasury Bond having a
remaining term equal to the subject option; the Company's estimated
annualized dividend yield for fiscal 1998 during the month preceding
November 30, 1997 was assumed to be constant over the life of the option;
option life was assumed to be equal to the term of the option, assuming
exercise at the end of the option term; and stock price volatility was
calculated based on the daily price volatility of the Common Stock for the
one-year period prior to November 30, 1997 (for the period prior to the
Merger, the volatility was determined based on the Pre-Merger Index). A
discount of 25% was applied to reflect the vesting requirements of the
options and the nontransferability of the underlying Common Stock.
(5) Merger-related retention awards. The awards vest over four years in equal
annual installments and are exercisable upon vesting. The exercise price of
such options is the closing price of a share of Common Stock as reported on
the NYSE Composite Tape on June 27, 1997. The options are not transferable,
except that all or any part of the options, but not any RORs, are
transferable once during the option holder's lifetime to the option holder's
spouse or other immediate family member or a trust for the exclusive benefit
of one or more such persons. The options provide that in the event of a
"change in control" of the Company, any unvested portion of the award will
immediately vest and become exercisable. The option holder's ability to
dispose of shares of Common Stock acquired upon exercise of the options
depends upon his or her age and the amount of such shares he or she has
previously disposed. RORs were granted with respect to these options.
15
<PAGE>
Option Exercises and Fiscal Year-End Holdings
The following table provides information concerning stock option exercises
in Fiscal 1997 and unexercised stock options held by each named executive
officer as of November 30, 1997 (giving effect to awards of stock options on
December 12, 1997 for services performed in Fiscal 1997).
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(#)(/3/) FY-END($)(/4/)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(#)(/1/) REALIZED($)(/2/) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Philip J. Purcell....... 1,173,416 $36,397,538 1,643,569 456,126 $43,206,208 $ 6,048,900
John J. Mack............ 40,537 1,027,798 493,982 527,746 20,778,973 10,780,416
Robert G. Scott......... 0 0 184,851 449,885 7,945,224 6,789,074
Thomas C. Schneider..... 679,770 20,636,101 450,708 281,914 4,123,483 3,603,155
Christine A. Edwards.... 134,778 4,118,217 433,339 259,523 14,019,530 3,236,555
</TABLE>
- --------
(1) This column reflects the number of shares underlying options exercised in
Fiscal 1997 by the named executive officers. The actual number of shares
received from options exercised in Fiscal 1997 by each named executive
officer who exercised options during Fiscal 1997 (net of shares
surrendered to cover the exercise price and tax liability) was: Mr.
Purcell--509,541; Mr. Mack--40,537; Mr. Schneider--232,896; and
Mrs. Edwards--50,909.
(2) The difference between the market price on the exercise date and the
option exercise price.
(3) The sale or disposition of shares of Common Stock underlying certain of
the options is restricted.
(4) The value of unexercised, in-the-money options is based upon the
difference between the exercise prices of all such options and $53.83, the
fair market value, as determined by the Compensation Committee, of a share
of Common Stock at the end of Fiscal 1997, which is equal to the average
of the closing prices of a share of Common Stock, as reported on the NYSE
Composite Tape, for the last seven trading days of Fiscal 1997. 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 these values will be realized.
Pension Plans
The named executive officers are covered under different pension plans,
principally because of the Company's corporate history. The following
paragraphs discuss estimated annual benefits payable upon retirement to each
of the named executive officers.
Mr. Purcell. The following table indicates the estimated annual benefits
payable upon retirement to Mr. Purcell, for the specified compensation and
years of service classifications, under the combined formulas of the Sears,
Roebuck and Co. Pension Plan (the "Sears Pension Plan"), the Dean Witter
Reynolds Inc. Pension Plan (the "DWR Pension Plan"), and the Morgan Stanley,
Dean Witter, Discover & Co. Transferred Executives Pension Supplement (the
"MSDWD TEPS") as of November 30, 1997, assuming that Mr. Purcell remains in
service with the Company until his retirement at age 65. The Sears Pension
Plan and DWR Pension Plan are defined benefit pension plans intended to
qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"). The MSDWD TEPS is a nonqualified, unfunded retirement plan that
provides benefits to certain key executives, including Mr. Purcell, who
transferred employment from Sears to the Company before June 30, 1993. Under
the MSDWD TEPS, participants are to receive a monthly retirement amount equal
to the excess, if any, of: (i) the amount that would have been payable from
the Sears Pension Plan had the transfer to the Company or a subsidiary of the
Company not occurred (without regard to any limits imposed by the Code); over
(ii) the amount of any defined benefit pension benefits payable from any
pension plan qualified under the Code, or any nonqualified pension benefits
payable to or on account of a participant from any plan of Sears, the Company
or any of their subsidiaries; provided, however, that the benefit payable
under the MSDWD TEPS shall not exceed the benefit that would be paid if the
participant's annual pension earnings used to calculate benefits were equal to
the participant's earnings for 1994.
16
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------
FINAL
AVERAGE
COMPENSATION 15 20 25 30 35
------------ -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 500,000 $100,473 $ 137,642 $ 174,552 $ 220,686 $ 255,340
750,000 152,166 208,515 264,427 334,314 386,783
1,000,000 203,858 279,388 354,303 447,942 518,226
1,500,000 307,243 421,133 534,053 675,198 781,111
2,000,000 410,627 562,879 713,803 902,454 1,043,997
2,500,000 514,012 704,625 893,554 1,129,711 1,306,883
3,000,000 617,397 846,370 1,073,304 1,356,967 1,569,768
3,500,000 720,782 988,116 1,253,055 1,584,223 1,832,654
4,000,000 824,166 1,129,862 1,432,805 1,811,479 2,095,540
</TABLE>
"Compensation" or "earnings" under the Sears Pension Plan, the DWR Pension
Plan and the MSDWD TEPS in combination generally refers to total annual cash
compensation for services rendered to the Company and its subsidiaries and
affiliates, including pre-tax salary deferrals, but excluding certain
specified items such as incentive and long-term executive compensation plan
awards, the value of stock awards, and employer contributions to profit-
sharing plans. "Earnings" used to calculate benefits under the DWR Pension
Plan also includes amounts deferred on and after January 1, 1995 under the
TDEPP. Current covered compensation under the Sears Pension Plan, the DWR
Pension Plan and the MSDWD TEPS in 1997 for Mr. Purcell was $3,200,000. As of
November 30, 1997, Mr. Purcell had approximately 19.67 years of credited
service. Benefits under the Sears Pension Plan, the DWR Pension Plan and the
MSDWD TEPS are computed on a straight-life annuity basis and are subject to a
deduction for Social Security benefits, and, in the case of the MSDWD TEPS,
for accrued benefits under the Sears Pension Plan and the DWR Pension Plan.
Messrs. Mack and Scott. Messrs. Mack and Scott are participants in the
Morgan Stanley & Co. Incorporated Pension Plan ("MS Pension Plan") and the
Excess Benefit Plan ("Excess Plan"). The MS Pension Plan and Excess Plan are
defined benefit pension plans. The MS Pension Plan is intended to qualify
under Section 401(a) of the Code and provides for normal retirement benefits
beginning at age 65, but permits earlier retirement at or after attaining age
55 with 10 years of Vesting Service as defined in the plan, subject to a
reduction in benefits if payments commence earlier than age 60. "Compensation"
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. The Excess Plan is intended to provide benefits
equal to the amount disallowed due to the limitation on pensions paid under
plans intended to qualify under Section 401(a) of the Code.
The Company also maintains a Supplemental Executive Retirement Plan ("SERP
Plan") covering current and former Managing Directors and Principals of MS&Co.
who are at least age 55 and have completed at least five years of service and
whose age plus service equals or exceeds 65. Benefits without any reduction
are paid if payment occurs at or after age 60. Benefits payable under the SERP
Plan are also reduced by benefits payable under the MS Pension Plan, Excess
Plan, and pension plans of affiliates of the Company and former employers,
provided that the maximum annual retirement benefits do not exceed $140,000.
Assuming that the participants in the chart below were eligible for the SERP
Plan, the following table illustrates the total estimated annual normal
retirement pension benefits, including the Excess Plan and SERP Plan amounts
payable upon normal retirement at age 65 to participants for the specified
remuneration and years of credited service classification set forth below.
Benefit amounts are computed on a straight-life annuity basis. There is no
offset for Social Security benefits, although the MS Pension and Excess Plan
calculations take Social Security-covered compensation into consideration.
17
<PAGE>
PENSION PLAN TABLE
Annual Pension Benefit Based on Years of Credited Service at Age 65.
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------------
COMPENSATION 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 80,000 $100,000 $100,000 $110,000 $120,000
300,000 120,000 140,000 140,000 140,000 153,910
400,000 140,000 140,000 147,436 176,923 206,410
500,000 140,000 147,949 184,936 221,923 258,910
600,000 140,000 177,949 222,436 266,923 311,410
700,000 155,962 207,949 259,936 311,923 363,910
800,000 178,462 237,949 297,436 356,923 416,410
900,000 200,962 267,949 334,936 401,923 468,910
1,000,000 223,462 297,949 372,436 446,923 521,410
</TABLE>
The compensation of Mr. Mack and Mr. Scott for purposes of determining
benefits under the MS Pension Plan, Excess Plan and SERP Plan during Fiscal
1997 is the amount reported as base salary in the Summary Compensation Table.
As of November 30, 1997, the credited years of service (rounded to the nearest
whole year) for each is as follows: Mr. Mack--25; and Mr. Scott--27.
Mr. Schneider and Mrs. Edwards. Mr. Schneider and Mrs. Edwards are
participants in the DWR Pension Plan. Benefits under the DWR Pension Plan for
years after 1996 generally equal: (i) 1 percent of the participant's
compensation plus (ii) 0.5 percent of the participant's compensation that
exceeds the Social Security-covered compensation limit. Benefits for years
prior to 1997 generally equal the greater of: (i) benefits accrued under the
plan as of December 31, 1996; or (ii) the sum of (A) 1 percent of the
participant's annual compensation (up to $150,000 for all years) in 1990
through 1996, multiplied by pre-1997 years of service, plus (B) 0.5 percent of
the participant's compensation (as determined under (A)), if any, that exceeds
the Social Security-covered compensation limit, multiplied by pre-1997 years
of service, reduced by (C) the pension equivalent of the participant's August
31, 1980 account balance, if any, under the former DWR Profit Sharing Plan. Up
to 42.7 years of service may be taken into account under the DWR Pension Plan
for purposes of calculating that portion of the benefits based upon
compensation in excess of Social Security-covered compensation.
Mr. Schneider is also a participant in the DWR Supplemental Pension Plan
(the "DWR Supplemental Plan"), a nonqualified, unfunded retirement plan that
provides benefits equal to the difference between a target benefit (in Mr.
Schneider's case, the benefit payable to him under the DWR Pension Plan before
any reduction made pursuant to Code section 415(e)) and benefits payable under
the DWR Pension Plan and any other defined benefit plan of the Company and its
subsidiaries or other specified retirement plans. Benefits are computed on the
basis of a single life annuity, payable at age 65, and generally commence as
of the same date pension benefits commence under the DWR Pension Plan.
Mrs. Edwards' DWR Pension Plan benefit includes a supplemental benefit equal
to (i) the product of (A) the annual benefit she would be entitled to under
the Sears Pension Plan, as of the date she terminates employment with the
Company, if her years of service and compensation from the Company were taken
into account under the Sears Pension Plan, multiplied by (B) the ratio of Mrs.
Edwards' years of service credited under the Sears Pension Plan divided by her
total years of service with Sears and the Company, minus (ii) the benefit
payable to Mrs. Edwards under the Sears Pension Plan.
As of November 30, 1997, the estimated annual benefits payable under the DWR
Pension Plan at the earliest age when a participant may retire with an
unreduced benefit (age 65) to Mr. Schneider and Mrs. Edwards are $116,536 and
$82,479, respectively, and the estimated annual benefit payable to Mr.
Schneider under the DWR Supplemental Plan at the earliest age when a
participant may retire with an unreduced benefit (age 65) is $8,464.
18
<PAGE>
Severance Arrangement
The Company's Key Executive Employment Plan ("KEEP") was adopted by Dean
Witter Discover prior to the Merger and covers approximately 25 key executives
of Dean Witter Discover, including Messrs. Purcell and Schneider and Mrs.
Edwards. KEEP provides for payments and other benefits if, within two years of
a change in control, Dean Witter Discover or its successor terminates a
covered employee's employment (other than for cause or disability) or if the
employee resigns for certain defined reasons such as an adverse change in
responsibilities, a reduction in total compensation or certain required
geographic relocations. The Merger constituted a "change in control" for
purposes of KEEP.
Under KEEP, a covered employee may receive a lump sum payment of up to two
times the covered employee's average salary plus total bonus for the three
years prior to either the occurrence of a change in control or the termination
of the covered employee's employment, whichever produces the greater benefit.
When combined with the value of employee stock options that vest and deferred
compensation that is paid as a result of a change in control, cash payments
under KEEP may not exceed an amount that would not be subject to the excise
tax provisions of the applicable sections of the Code. In addition to a cash
payment, covered employees may also receive continued healthcare coverage for
the employee and the employee's spouse and dependent children by continuing to
pay the then-current employee contribution to the Company's healthcare plans.
Report of the Compensation Committees on Executive Compensation
Compensation Governance. The Compensation Committee is composed of the four
non-employee directors listed below. We are responsible to the Company's Board
of Directors, and to stockholders, for establishing and administering
compensation programs for the Company's senior officers ("Senior Officers"),
including Messrs. Purcell, Mack, Schneider and Scott and Mrs. Edwards, the
Company's five most highly paid executive officers (the "Senior Executives"),
and for making awards under the Company's equity-based employee compensation
benefit plans. Before the Merger, the Dean Witter Discover Compensation
Committee established and administered compensation programs for Dean Witter
Discover's senior officers, including Messrs. Purcell and Schneider and Mrs.
Edwards, and made awards under Dean Witter Discover's equity-based employee
compensation benefit plans.
Compensation Policies. Our fundamental policy is to closely link total
compensation for Senior Officers to achieving annual and long-term performance
goals. We design our policies to:
. Base compensation on Company, business unit and individual performance
factors.
. Motivate achievement of strategic business objectives.
. Provide total compensation comparable to that of the Company's competitors,
thereby enabling the Company to attract, recruit and retain Senior Officers
critical to the Company's long-term success.
. Include a significant equity component in total compensation, thereby
aligning the long-term interests of Senior Officers and stockholders.
We utilize return on equity ("ROE") as a key measure of corporate performance.
We believe that our fundamental policies are like those of our two predecessor
firms.
We utilize both quantitative and qualitative factors when determining total
compensation for Senior Officers and when awarding equity-based compensation
to employees. Quantitative factors include, among others, absolute levels of,
and year-to-year changes in, net revenues, net income, profit before taxes,
earnings per share, book value per share and ROE, and qualitative factors
include achievement of pre-established performance goals, customer
satisfaction and others. We also examine the ratios of compensation to net
revenues and compensation to pre-compensation profit before taxes. We review
survey data from peer companies (including data from the Financial Service
Companies, as defined below, and some companies included in the "Dean Witter
Discover Peer Group" referred to in the Stock Performance Graph appearing on
page 23 below) for purposes of monitoring compensation levels for Senior
Officers in relation to performance. Competitive information comes to us from
internally generated studies. We also sometimes use the services of
independent consultants who
19
<PAGE>
review management's data and provide the Compensation Committee with
independent analyses and viewpoints. We generally do not assign specific
weighting to the factors, but determine total compensation based upon a more
subjective process, focusing on Company and business unit financial
performance as well as individual performance.
Our policy is to maximize the tax deductibility of compensation payments to
Senior Executives, including Mr. Purcell and Mr. Mack, under Section 162(m) of
the Code and the regulations thereunder ("Section 162(m)"). To this end, the
Company has obtained stockholder approval for incentive plans designed and
administered to qualify compensation awarded thereunder as "performance-
based." However, we may authorize payments that may not be fully deductible if
we believe it is in the interests of stockholders to do so.
Compensation Program. Total compensation for Senior Officers, the components
of which are designed to meet the Company's compensation policies, is composed
of two elements, excluding employee benefits: base salary, and incentive
compensation consisting of cash (bonus) and equity-based (such as restricted
stock units and stock options) components. Together, these components comprise
a Senior Officer's "Total Reward." In general, the greater the Total Reward,
the greater the percentage of the total that is in the form of non-cash,
equity-based compensation.
1. Base Salaries. Senior Officer base salaries are a relatively small
portion of overall compensation. We consider individual experience,
responsibilities and tenure when determining base salaries. Base salaries are
generally in the range of median base salaries paid by the Financial Service
Companies to employees having duties and responsibilities comparable to those
of the Senior Officers.
2. Incentive Compensation. Consistent with our compensation policies linking
Senior Officer compensation with performance, compensation for Senior Officers
is heavily weighted toward incentive compensation paid on the basis of
performance. Senior Officers are eligible for annual incentive compensation,
which is highly variable by annual performance. Generally speaking, a portion
of the annual incentive compensation is paid in cash, and a significant
portion is paid in equity-based compensation, the value of which cannot be
realized immediately and will be dependent upon the future market value of the
Company's stock. We believe that since the ultimate value of the equity-based
compensation depends upon the continued success of the Company, equity-based
compensation will provide a continuing incentive to the Senior Officers to
foster the Company's success long after the compensation has been awarded.
For Senior Executives, we establish incentive compensation through the
application of performance criteria adopted in accordance with the
requirements of Section 162(m). The performance criteria, which Morgan Stanley
Group used historically, include a formula that links compensation of the
Senior Executives to the Company's ROE versus the Company's cost of equity
capital and annual growth in book value per share.
Compensation for Fiscal 1997. In determining the amount of annual incentive
compensation we awarded to the Senior Officers for Fiscal 1997, we reviewed
the Company's achievements and financial performance for 1997, as well as
individual and business unit performance. We also compared the Company's
financial performance with the financial performance of the Financial Service
Companies. For Fiscal 1997, the Committee recognized that the Company's ROE
and earnings per share were above the estimated mean ROE and earnings per
share for the Financial Service Companies, notwithstanding Merger-related
costs, and that year-to-year percentage increase in the Company's ROE was
third among the Financial Service Companies. While we considered the financial
performance and compensation levels of competitors when we determined Total
Rewards for Senior Officers, these were not the sole factors we considered,
and we did not attempt to set Total Rewards in a range established by a
comparison of the financial performance of, and compensation levels of, the
Financial Service Companies. For purposes of this Report, the term "Financial
Service Companies" refers collectively to the following companies (or
subsidiaries thereof) in the financial services industry: A. G. Edwards, Inc.;
Advanta Corp.; American Express Company; American International Group, Inc.;
Bankers Trust New York Corporation; The Bear Stearns Companies Inc.; Citicorp;
Franklin Resources, Inc.; J.P. Morgan & Co. Incorporated; Lehman Brothers
Holdings Inc.; MBNA Corporation; Merrill Lynch & Co., Inc.; Paine Webber
20
<PAGE>
Group Inc.; Salomon Inc; T. Rowe Price Associates; Travelers Group Inc.; and
United Asset Management Corporation. We determined incentive compensation for
the Senior Officers primarily on the Company's financial performance for
Fiscal 1997, but also considered individual and business unit performance.
In evaluating the Company's performance during Fiscal 1997, we considered
the Company's excellent performance, including financial performance, both
before and after the Merger's completion. The Company successfully realigned
its business into major business units. In this realignment, various
businesses were successfully moved within the new management structure. Senior
personnel from both predecessor companies worked together to achieve a
successful transition during which the Company retained all key executives
across its businesses.
The early business results of the Merger are excellent. The Company is
experiencing improvements in several of its key securities market share
positions. The already strong rankings of the traditional institutional
business improved in 1997. For example, its mergers and acquisitions group
remained first in completed and announced transactions worldwide, and the
Company maintained or increased its underwriting ranking in almost every
market category. The most significant increase in investment banking lead-
managed rankings was in REITs, up to sixth in 1997 from fifteenth in 1996.
These market share gains also benefited the individual investor business. Dean
Witter account executives and their clients benefited from a broader array of
products, including significantly more syndicate products and stronger equity
research. Equity research is ranked second in the most recent Institutional
Investor poll while tied for first for most First Team analysts. We increased
retail market share, measured by the number of our account executives compared
to our major competitors, from 17.4% to 18.7%, and generated significant
growth in new accounts.
Finally, we believe that the strategic vision of Messrs. Purcell and Mack
and the other Senior Officers, including the Senior Executives, has positioned
the Company to compete and gain market share in its key worldwide businesses.
We share the view that the financial services industry is becoming
increasingly competitive and that combining the strengths of Dean Witter
Discover and Morgan Stanley Group has already provided stockholders with
substantial benefits.
All of these factors led us to conclude that the Senior Executives and the
Senior Officers performed extremely well in Fiscal 1997. In general, the
Merger transition was seamless and all businesses continued to operate well
during the period before and after the Merger's completion. The Company's
overall financial performance was very good in an excellent securities
environment and a challenging credit services environment. Net income of
$2,586 million was $606 million more than in the preceding fiscal year, an
increase of 31%. Company ROE of 22% increased by two percentage points above
the 1996 rate, and compared favorably with the Company's goal of 18-20% over
the course of the business cycle, even with the higher equity capital levels
resulting from the cessation of stock repurchase programs. We also noted the
market environment and that between the announcement of the Merger on February
5, 1997 and December 12, 1997, the increase in the Company's stock price was
greater than the average increase in stock price of the Financial Service
Companies for the same period.
We certified in accordance with Section 162(m) that the Company's financial
results for Fiscal 1997 satisfied the performance criteria set in accordance
with Section 162(m) for Fiscal 1997. After an analysis of the considerations
set forth above, we awarded Total Rewards to the Senior Executives, other than
Messrs. Purcell and Mack, for Fiscal 1997 that were equal to or below the
Total Rewards yielded by the application of the compensation formula contained
in the performance criteria. We awarded incentive compensation to the Senior
Officers, including the Senior Executives, partly in cash and partly in the
form of long-term equity components (restricted stock units and options). We
awarded an average of approximately 25% of each Senior Officer's Total Reward
in long-term equity, although the Senior Executives had a greater percentage
of equity-based compensation in their year-end incentive compensation than the
average of the other Senior Officers and other employees receiving equity-
based compensation. The value we ascribed to restricted stock units was based
on a 25% discount from the fair market value of the Common Stock in order to
compensate for the vesting characteristics and the significant restrictions on
disposition of these units. Accordingly, the value we ascribed to these units
differs from the amounts reported in the Summary Compensation Table under the
column headed
21
<PAGE>
"Restricted Stock Awards" because the amounts contained in the Table are based
on the price of Common Stock on the date of grant. We valued stock option
awards based on a modified Black-Scholes methodology, including a 25% discount
to reflect the vesting characteristics of the options and the
nontransferability of the underlying Common Stock.
CEO and President Compensation for 1997. Before the Merger, the Dean Witter
Discover Compensation Committee increased the CEO's base salary for 1997 to
$775,000, an increase of 3.3%, based on a review of the salaries of chief
executive officers of selected competitors of Dean Witter Discover, Mr.
Purcell's five-year salary history and a subjective assessment of Mr.
Purcell's overall performance. We also increased the President's base salary
in 1997 to the level of the CEO. We believed that all elements of the CEO's
and the President's compensation should be equal.
After consideration of all the factors discussed above and using the same
Section 162(m)-based performance criteria cited previously for other Senior
Executives, the Committee approved equal annual incentive compensation for Mr.
Purcell and Mr. Mack, in an amount equal to or below the amounts of Total
Reward yielded by the application of the compensation formula containing the
performance criteria. The incentive compensation for each consisted of cash
equal to $9,678,750, options to acquire 126,126 shares of Common Stock and
56,055 restricted stock units. The Committee valued the equity components as
discussed above.
Additional Equity-Based Awards. Prior to the Merger, in January 1997,
consistent with Dean Witter Discover's historical compensation policies, Dean
Witter Discover's Compensation Committee awarded certain senior officers of
Dean Witter Discover, including Mr. Purcell, Mr. Schneider and Mrs. Edwards,
stock options. In addition, shortly after completion of the Merger, to address
special equity, retention or pay transition issues related to the Merger, we
awarded certain Senior Officers, including Mr. Schneider, Mr. Scott and Mrs.
Edwards, special stock option grants. Realization of any reward from such
option grants is related solely to stock performance and thereby aligns
compensation with stockholder returns. The stock subject to these awards is
described in footnote 17 of the Summary Compensation Table found on page 11
and in the Options Grant Table. In the future, we generally intend to award
all equity-based compensation to Senior Officers in connection with their
Total Rewards.
Conclusion. We believe that attracting and retaining management and
employees of high caliber is essential to maintaining a high-performing
organization which creates long-term value for its stockholders. Offering a
competitive, performance-based compensation program that has a large equity
component helps to achieve this objective by aligning the interests of
executives and other key employees with those of stockholders. We believe that
the Company compensation program during Fiscal 1997 has met the objectives
identified above.
Respectfully submitted,
Morgan Stanley, Dean Witter, Discover & Co.
Compensation Committee (commencing May 31, 1997)
Daniel B. Burke, Chair
Edward A. Brennan
Allen E. Murray
Clarence B. Rogers, Jr.
Dean Witter, Discover & Co.
Compensation Committee (through May 30, 1997)
Edward A. Brennan, Chair
C. Robert Kidder
Michael A. Miles
Clarence B. Rogers, Jr.
22
<PAGE>
Stock Performance Graph
Set forth below is a graph comparing cumulative total stockholder returns of
the Company (MWD), the Standard & Poor's 500 Stock Index (S&P 500), the
Standard & Poor's Financial Index (S&P Financial) and a market capitalization
weighted group of thirteen companies that Dean Witter Discover designated as
its peer group for purposes of comparing cumulative stockholder returns in its
proxy statement stock performance graph before the Merger (the "Dean Witter
Discover Peer Group"). The Dean Witter Discover Peer Group consists of the
following thirteen companies: A.G. Edwards, Inc., American Express Company,
Banc One Corporation, The Charles Schwab Corporation, Citicorp, The Equitable
Companies Incorporated, Franklin Resources, Inc., Household International,
Inc., MBNA Corporation, Merrill Lynch & Co., Inc., NationsBank Corporation,
Paine Webber Group Inc. and Travelers Group Inc.
As a result of the Merger, the Company's business mix has significantly
changed from that of Dean Witter Discover. In addition, the Company believes
that the consolidation in the financial services industry makes, and will
continue to make, comparisons with highly customized peer groups difficult.
Accordingly, the Company has determined that it will no longer use the Dean
Witter Discover Peer Group for purposes of comparing cumulative stockholder
returns in its proxy statement stock performance graph; the Dean Witter
Discover Peer Group is included in the current stock performance graph for the
last time, as required by SEC rules. Going forward, the Company intends in its
stock performance graph to compare its cumulative stockholder returns solely
with the S&P 500 Index and the S&P Financial Index, which it believes provide
a more appropriate basis for comparison.
The graph assumes $100 invested on February 22, 1993 (the date of Dean
Witter Discover's initial public offering) in the Company (using Dean Witter
Discover's initial public offering price of $27 per share), and reinvestment
of dividends on the date of payment without commissions, and is rounded to the
nearest whole dollar.
Cumulative Total Return
Feburary 22, 1993-November 30, 1997
[Chart Appears Here]
Date MWD S&P S&P Financials Peer Group
Nov-97 427.59 244.50 301.36 350.48
Oct-97 385.78 233.66 289.91 350.47
Sep-97 424.47 241.75 296.04 364.46
Aug-97 377.91 229.20 273.91 339.08
Jul-97 411.75 242.60 286.88 374.09
Jun-97 337.25 224.91 264.46 328.56
May-97 324.03 215.26 250.55 299.69
Apr-97 298.66 202.91 239.37 291.36
Mar-97 272.34 191.48 223.33 321.20
Feb-97 299.67 199.68 240.38 311.09
Jan-97 296.69 198.13 231.30 277.46
Dec-96 257.78 166.48 213.88 261.95
Nov-96 266.03 190.25 221.88 255.41
Oct-96 228.37 176.55 202.27 236.38
Sep-96 213.32 172.13 186.20 222.16
Aug-96 193.93 162.96 176.16 216.00
Jul-96 196.51 159.59 170.44 219.97
Jun-96 220.61 166.97 173.87 216.34
May-96 228.88 166.34 172.08 212.18
Apr-96 209.75 162.15 168.42 216.55
Mar-96 220.37 159.80 171.48 209.38
Feb-96 206.90 158.27 169.63 202.75
Jan-96 207.46 155.82 166.38 188.89
Dec-95 180.17 151.66 158.07 195.09
Nov-95 195.50 148.79 150.40 178.70
Oct-95 190.17 142.54 143.95 193.51
Sep-95 215.01 143.05 149.85 177.38
Aug-95 195.90 137.25 141.01 168.17
Jul-95 192.42 136.91 133.44 157.55
Jun-95 179.08 132.52 129.60 154.89
May-95 180.98 129.51 129.91 142.84
Apr-95 160.95 124.53 119.01 136.63
Mar-95 154.80 120.97 116.39 136.06
Feb-95 152.36 117.50 114.97 125.99
Jan-95 141.41 113.09 108.87 118.68
Dec-94 128.17 110.23 102.39 119.89
Nov-94 132.40 108.62 101.18 129.12
Oct-94 145.58 112.73 107.40 122.60
Sep-94 141.81 110.25 106.08 132.05
Aug-94 160.66 113.02 113.93 123.85
Jul-94 150.80 105.56 110.01 119.32
Jun-94 140.95 105.11 107.17 124.74
May-94 146.59 107.75 110.72 119.80
Apr-94 140.95 106.01 105.03 116.36
Mar-94 122.22 104.67 101.48 123.94
Feb-94 134.88 109.44 105.70 133.41
Jan-94 143.30 112.50 111.90 125.54
Dec-93 129.26 106.80 106.18 123.94
Nov-93 141.88 107.50 104.07 129.46
Oct-93 153.13 106.53 107.67 138.13
Sep-93 163.86 106.33 114.21 130.28
Aug-93 144.79 107.15 111.90 125.36
Jul-93 138.40 103.24 109.04 121.24
Jun-93 139.29 103.65 106.88 112.66
May-93 127.70 103.35 101.55 111.07
Apr-93 143.56 100.66 101.76 115.30
Mar-93 142.15 103.15 105.14 105.77
Feb-93 122.67 101.02 101.03 102.80
Feb-93 100.00 100.00 100.00 100.00
23
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
The Company believes that under the SEC's rules for reporting of securities
transactions by directors and executive officers, all required reports have
been timely filed, except that Thomas R. Butler, a former executive officer of
Dean Witter Discover, filed a report approximately one month late regarding
his exercise of an expiring employee stock option, a transaction exempt under
Rule 16b-3.
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 Fiscal 1997 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.
The Company extends, and in the ordinary course of its business during
Fiscal 1997 the Company extended, credit to certain directors, officers and
employees of the Company, as well as to members of their immediate families,
in connection with their purchases 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
collectability or present other unfavorable features. To the extent that
officers and employees of the Company's securities and asset management
businesses or the Company's wholly-owned subsidiary Discover Brokerage Direct,
Inc. (and members of their immediate families) wish to purchase securities in
brokerage transactions, they are ordinarily required to do so through MS&Co.,
DWR or Discover Brokerage Direct, Inc., each of which may offer them discounts
on its standard commission rate. MS&Co. and DWR also, from time to time and in
the ordinary course of its business, enter into transactions involving the
purchase or sale of securities from or to certain directors, officers and
employees of the Company 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 stock repurchase
authorizations in effect from time to time, 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, may also make 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, relocation and other expenses. In some
cases, the Company does not charge interest on such advances and loans.
24
<PAGE>
APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO CHANGE COMPANY
NAME
The Board of Directors has unanimously declared advisable an amendment to
the Company's Certificate of Incorporation to change the Company's name to
"Morgan Stanley Dean Witter & Co." and has directed that the proposed name
change be submitted to the stockholders at the Annual Meeting.
If the name change is approved, the text of Article I of the Certificate of
Incorporation would read in its entirety as follows:
"The name of the corporation (which is hereinafter referred to
as the "Corporation") is: Morgan Stanley Dean Witter & Co."
Your Company believes that it is critical that its name represent a single,
global brand in order to strengthen its position in the marketplace. At the
time of the Merger, simplicity and clarity necessitated choosing a name that
reflected the two companies' combined recognizable strengths--the three
primary brands. Since the Merger, however, we have determined that our
positioning in the marketplace would be strengthened by establishing one brand
for our securities business, separate from the Discover and NOVUS brands,
which are already strong and established brands in our credit and transaction
services business. Additionally, in an industry that puts great value on brand
names and what they represent, we have found that the marketplace has been
leading us to the Morgan Stanley Dean Witter name and attributing it to a
preeminent global securities firm. The proposed name change does not reflect
any change in the Company's strategic business focus. The Company plans to
continue to leverage its leading market positions in each of its three primary
businesses--securities, asset management and credit and transaction services--
to become the world's preeminent financial services firm.
Under Delaware law, stockholders will not have any dissenters' or appraisal
rights in connection with the proposed amendment. If the proposed name change
becomes effective, it will not affect the rights of stockholders of the
Company or the validity and transferability of certificates representing the
Company's stock.
If the proposed amendment is approved by the stockholders, it will become
effective after filing a certificate of amendment required by the General
Corporation Law of the State of Delaware. However, the Board of Directors may
abandon the proposed amendment prior to effectiveness, without any further
stockholder vote, if it determines that such action would be in the best
interests of the Company and its stockholders.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED CHANGE
IN THE COMPANY'S NAME.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Based on the recommendation of the Audit Committee, the Board of Directors
has appointed Deloitte & Touche LLP as independent auditors to examine the
consolidated financial statements of the Company for the fiscal year ending
November 30, 1998 and to perform other appropriate accounting services.
A proposal will be presented at the Annual Meeting to ratify the appointment
of Deloitte & Touche LLP as the Company's independent auditors. A
representative of Deloitte & Touche LLP is expected to be present at the
meeting and will be available to respond to appropriate questions and make
statements if the representative so desires. If the stockholders do not ratify
this appointment, the Board of Directors will reconsider its appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
25
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 annual
meeting of stockholders must be received by the Secretary of the Company, 1585
Broadway, New York, New York 10036, not later than October 23, 1998 to be
considered for inclusion in the Company's 1999 proxy materials.
ADDITIONAL INFORMATION
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED NOVEMBER 30,
1997, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO. REQUESTS FOR
COPIES SHOULD BE DIRECTED TO THE COMPANY'S OFFICE OF INVESTOR RELATIONS, 1221
AVENUE OF THE AMERICAS, 33RD FLOOR, NEW YORK, NEW YORK 10020 (TELEPHONE 800-
733-2307).
26
<PAGE>
PROXY/VOTING DIRECTIVE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
THIS PROXY/VOTING DIRECTIVE IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AND RELATES TO THE 1998 ANNUAL MEETING OF STOCKHOLDERS, MARCH 24, 1998
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, as amended, among Morgan Stanley, Dean Witter, Discover & Co. (as
successor to Morgan Stanley Group Inc.), a Delaware corporation (the "Company"),
and the persons listed on Appendix A thereto and/or (ii) certain agreements
entered into between the Company and certain former general partners of Miller
Anderson & Sherrerd, LLP and/or (iii) certain agreements entered into between
the Company and certain officers of Van Kampen American Capital, Inc. and/or
(iv) Appendix A to the Company's 1986 Stock Option Plan, as amended, and/or (v)
Appendix A to the Company's Performance Unit Plan, as amended, and/or (vi)
Appendix A to the award agreements or certificates entered into pursuant to the
Company's 1988 Equity Incentive Compensation Plan, as amended (the "1988 EICP")
and/or (vii) Appendix A to the award agreements or certificates entered into
pursuant to the Company's 1995 Equity Incentive Compensation Plan, as amended
(the "1995 EICP") and/or (viii) Exhibit B to the Trust Agreement (the "Trust
Agreement") dated as of March 5, 1991, as amended, 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 1988 EICP and the 1995 EICP (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 the Trust
Shares in the preliminary vote 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 Christine A. Edwards, Robert G.
Scott and Ronald T. Carman, 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 1998 Annual Meeting of Stockholders of the Company (the "Annual
Meeting") to be held on March 24, 1998 at the Hyatt Regency Grand Cypress Hotel,
One Grand Cypress Boulevard, Orlando, Florida, and at any adjournments or
postponements 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 for the election
of a person to the Board of Directors if any nominee named herein becomes unable
to serve or for good cause will not serve, upon all matters incident to the
conduct of the Annual Meeting, upon all matters presented at the Annual Meeting
but which were not known to the Board of Directors at a reasonable time before
the solicitation of this proxy and upon such other business as may properly come
before the the Annual 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 OR HER VOTE ON ANY OF THE PROPOSALS ON THE REVERSE, THE NUMBER OF
HIS OR HER SHARES (OTHER THAN TRUST SHARES) SUBJECT TO THE VOTING AGREEMENTS OR
HELD ON HIS OR HER BEHALF WILL BE VOTED IN FAVOR OF ANY SUCH PROPOSAL FOR
PURPOSES OF THE PRELIMINARY VOTE AMONG EMPLOYEE STOCKHOLDERS OF THE COMPANY WHO
ARE SUBJECT TO ONE OR MORE VOTING AGREEMENTS.
<PAGE>
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THIS PROXY/VOTING DIRECTIVE WILL BE VOTED AS DIRECTED IN THE PRELIMINARY VOTE.
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 IN THE PRELIMINARY VOTE. THE MORGAN STANLEY, DEAN WITTER, DISCOVER
& CO. BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE FOLLOWING
PROPOSALS:
FOR ALL
1. Proposal to elect as directors all nominees FOR WITHHOLD EXCEPT
listed (except as marked to the contrary below): [_] [_] [_]
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate of FOR AGAINST ABSTAIN
Incorporation to change the corporate name to [_] [_] [_]
"Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of Deloitte FOR AGAINST ABSTAIN
& Touche LLP as the Company's independent [_] [_] [_]
auditors for the fiscal year ending November
30, 1998.
IF YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE CHECK THIS BOX. [_]
Please make sure to sign and date this card
using black or blue ink.
Dated , 1998
---------------------------
---------------------------------------
Signature
- --------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR PROXY/VOTING DIRECTIVE TODAY!
PLEASE DATE AND SIGN THE ENCLOSED PROXY/VOTING DIRECTIVE
AND RETURN IT PROMPTLY. TO HAVE YOUR SHARES VOTED IN
ACCORDANCE WITH YOUR DIRECTIONS IN THE PRELIMINARY VOTE,
YOU MUST COMPLETE AND RETURN THE PROXY/VOTING DIRECTIVE
SO THAT IT IS RECEIVED NOT LATER THAN MARCH 12, 1998.
------------------------------------------------------------
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
1998 VOTING INSTRUCTION FORM ("VIF")
FOR DEAN WITTER REYNOLDS INC. ACCOUNT EXECUTIVE PRODUCTIVITY
COMPENSATION PLAN PARTICIPANTS
Dean Witter Trust FSB, as Custodian under the Dean Witter Reynolds Inc. Account
Executive Productivity Compensation Plan (the "Plan"), is hereby directed to
vote, as indicated on the reverse side of this VIF, in person or by proxy, all
of the shares of common stock of Morgan Stanley, Dean Witter, Discover & Co.
(the "Company") in the undersigned's Plan account, at the 1998 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on March 24, 1998
at 2:00 P.M., Eastern time, and at any and all adjournments or postponements
thereof, upon the proposals listed on the reverse side of this VIF and more
fully described in the Company's Notice of Annual Meeting of Stockholders dated
February 20, 1998 and the accompanying Proxy Statement and, in its (or the
proxies') discretion, for the election of a person to the Board of Directors if
any nominee named herein becomes unable to serve or for good cause will not
serve, upon all matters incident to the conduct of the Annual Meeting, upon all
matters presented at the Annual Meeting but which were not known to the Board of
Directors at a reasonable time before the solicitation of this VIF and upon such
other business as may properly come before the Annual Meeting. THE UNDERSIGNED
UNDERSTANDS THAT, IF I SIGN, DATE AND RETURN THE VIF, THE CUSTODIAN OR PROXIES
WILL VOTE FOR EACH PROPOSAL FOR WHICH I DO NOT GIVE VOTING INSTRUCTIONS AND IN
THE DISCRETION OF THE CUSTODIAN OR PROXIES ON ALL OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING. THE UNDERSIGNED ALSO UNDERSTANDS THAT
THIS VIF, PROPERLY COMPLETED, MUST BE RECEIVED NOT LATER THAN 5:00 P.M., EASTERN
TIME, ON MARCH 20, 1998, OR THE CUSTODIAN WILL NOT VOTE THE SHARES IN MY PLAN
ACCOUNT.
PLEASE SIGN AND DATE THIS VIF ON THE OTHER SIDE.
A POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED.
<PAGE>
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THE MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
FOR ALL
1. Proposal to elect as directors all nominees FOR WITHHOLD EXCEPT
listed (except as marked to the contrary below): [_] [_] [_]
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate of FOR AGAINST ABSTAIN
Incorporation to change the corporate name to [_] [_] [_]
"Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of Deloitte FOR AGAINST ABSTAIN
& Touche LLP as the Company's independent [_] [_] [_]
auditors for the fiscal year ending November
30, 1998.
IF YOU PLAN TO ATTEND THE [_]
ANNUAL MEETING, PLEASE
CHECK THIS BOX
Dated, , 1998
--------------------------
Please sign name exactly as imprinted (do not print).
---------------------------------------
Signature
- --------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR VIF TODAY!
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED VIF AND
RETURN IT PROMPTLY. TO HAVE YOUR PLAN SHARES VOTED IN
ACCORDANCE WITH YOUR DIRECTIONS, YOU MUST COMPLETE
AND RETURN THE VIF SO THAT IT IS RECEIVED NOT LATER
THAN 5:00 P.M., EASTERN TIME, ON MARCH 20, 1998.
------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
1998 VOTING INSTRUCTION FORM ("VIF")
FOR DEAN WITTER START PLAN PARTICIPANTS
Mellon Bank, N.A., as Trustee under the Dean Witter START Plan (Saving Today
Affords Retirement Tomorrow) (the "Plan") is hereby directed to vote, as
indicated on the reverse side of this VIF, in person or by proxy, all of the
shares of common stock of Morgan Stanley, Dean Witter, Discover & Co. (the
"Company") in the undersigned's Plan account, at the 1998 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on March 24, 1998
at 2:00 P.M., Eastern time, and at any and all adjournments or postponements
thereof, upon the proposals listed on the reverse side of this VIF and more
fully described in the Company's Notice of Annual Meeting of Stockholders dated
February 20, 1998 and the accompanying Proxy Statement and, in its (or the
proxies') discretion, for the election of a person to the Board of Directors if
any nominee named herein becomes unable to serve or for good cause will not
serve, upon all matters incident to the conduct of the Annual Meeting, upon all
matters presented at the Annual Meeting but which were not known to the Board of
Directors at a reasonable time before the solicitation of this VIF and upon such
other business as may properly come before the Annual Meeting. THE UNDERSIGNED
UNDERSTANDS THAT THIS VIF, PROPERLY COMPLETED, MUST BE RECEIVED NO LATER THAN
5:00 P.M., EASTERN TIME, ON MARCH 19, 1998 FOR MY SHARES TO BE VOTED IN
ACCORDANCE WITH MY INSTRUCTIONS. THE UNDERSIGNED ALSO UNDERSTANDS THAT, IF I
SIGN, DATE AND RETURN THIS VIF, THE TRUSTEE OR PROXIES WILL VOTE FOR EACH
PROPOSAL FOR WHICH I DO NOT GIVE VOTING INSTRUCTIONS AND IN THE DISCRETION OF
THE TRUSTEE OR PROXIES ON ALL MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING. THE UNDERSIGNED FURTHER UNDERSTANDS THAT THE TRUSTEE INTENDS TO VOTE OR
GRANT PROXIES WITH RESPECT TO ALL UNDIRECTED SHARES HELD UNDER THE PLAN IN THE
SAME PROPORTION AS THE SHARES OF ALL PLAN PARTICIPANTS WHO HAVE TIMELY DELIVERED
PROPERLY EXECUTED VOTING INSTRUCTIONS, UNLESS OTHERWISE REQUIRED BY LAW.
PLEASE SIGN AND DATE THIS VIF ON THE OTHER SIDE.
A POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED.
UNDER THE TERMS OF THE PLAN, THE TRUSTEE WILL HOLD YOUR VOTING INSTRUCTION IN
CONFIDENCE.
- -----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THE MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
FOR ALL
1. Proposal to elect as directors all FOR WITHHOLD EXCEPT
nominees listed (except as marked [_] [_] [_]
to the contrary below):
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate FOR AGAINST ABSTAIN
of Incorporation to change the corporate [_] [_] [_]
name to "Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as the Company's [_] [_] [_]
independent auditors for the fiscal year
ending November 30, 1998.
IF YOU PLAN TO ATTEND THE [_]
ANNUAL MEETING, PLEASE
CHECK THIS BOX
Dated, , 1998
---------------------------------
Please sign name exactly as imprinted (do not print).
---------------------------------------------
Signature
- --------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
---------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR VIF TODAY!
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED VIF AND RETURN
IT PROMPTLY. TO HAVE YOUR PLAN SHARES VOTED IN ACCORDANCE
WITH YOUR DIRECTIONS, YOU MUST COMPLETE AND RETURN THE VIF
SO THAT IT IS RECEIVED NOT LATER THAN 5:00 P.M., EASTERN
TIME, ON MARCH 19, 1998.
---------------------------------------------------------------
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
1998 VOTING INSTRUCTION FORM ("VIF")
FOR DEAN WITTER REYNOLDS INC. BRANCH MANAGER
COMPENSATION PLAN PARTICIPANTS
Dean Witter Trust FSB, as Custodian under the Dean Witter Reynolds Inc. Branch
Manager Compensation Plan (the "Plan"), is hereby directed to vote, as indicated
on the reverse side of this VIF, in person or by proxy, all of the shares of
common stock of Morgan Stanley, Dean Witter, Discover & Co. (the "Company") in
the undersigned's Plan account, at the 1998 Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held on March 24, 1998 at 2:00 P.M.,
Eastern time, and at any and all adjournments or postponements thereof, upon the
proposals listed on the reverse side of this VIF and more fully described in the
Company's Notice of Annual Meeting of Stockholders dated February 20, 1998 and
the accompanying Proxy Statement and, in its (or the proxies') discretion, for
the election of a person to the Board of Directors if any nominee named herein
becomes unable to serve or for good cause will not serve, upon all matters
incident to the conduct of the Annual Meeting, upon all matters presented at the
Annual Meeting but which were not known to the Board of Directors at a
reasonable time before the solicitation of this VIF and upon such other business
as may properly come before the Annual Meeting. THE UNDERSIGNED UNDERSTANDS
THAT, IF I SIGN, DATE AND RETURN THIS VIF, THE CUSTODIAN OR PROXIES WILL VOTE
FOR EACH PROPOSAL FOR WHICH I DO NOT GIVE VOTING INSTRUCTIONS AND IN THE
DISCRETION OF THE CUSTODIAN OR PROXIES ON ALL OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE ANNUAL MEETING. THE UNDERSIGNED ALSO UNDERSTANDS THAT THIS VIF,
PROPERLY COMPLETED, MUST BE RECEIVED NO LATER THAN 5:00 P.M., EASTERN TIME, ON
MARCH 20, 1998, OR THE CUSTODIAN WILL NOT VOTE THE SHARES IN MY PLAN ACCOUNT.
PLEASE SIGN AND DATE THIS VIF ON THE OTHER SIDE.
A POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THE MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
FOR ALL
1. Proposal to elect as directors all FOR WITHHOLD EXCEPT
nominees listed (except as marked [_] [_] [_]
to the contrary below):
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate FOR AGAINST ABSTAIN
of Incorporation to change the corporate [_] [_] [_]
name to "Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as the Company's [_] [_] [_]
independent auditors for the fiscal year
ending November 30, 1998.
IF YOU PLAN TO ATTEND THE [_]
ANNUAL MEETING, PLEASE
CHECK THIS BOX
Dated, , 1998
---------------------------------
Please sign name exactly as imprinted (do not print).
---------------------------------------------
Signature
- --------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
---------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR VIF TODAY!
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED VIF AND RETURN
IT PROMPTLY. TO HAVE YOUR PLAN SHARES VOTED IN ACCORDANCE
WITH YOUR DIRECTIONS, YOU MUST COMPLETE AND RETURN THE VIF
SO THAT IT IS RECEIVED NOT LATER THAN 5:00 P.M., EASTERN
TIME, ON MARCH 20, 1998.
---------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
1998 VOTING INSTRUCTION FORM ("VIF")
FOR SPS TRANSACTION SERVICES, INC. START PLAN PARTICIPANTS
Mellon Bank, N.A., as Trustee under the SPS Transaction Services, Inc. START
Plan (Saving Today Affords Retirement Tomorrow) (the "Plan"), is hereby directed
to vote, as indicated on the reverse side of this VIF, in person or by proxy,
all of the shares of common stock of Morgan Stanley, Dean Witter, Discover & Co.
(the "Company") in the undersigned's Plan account, at the 1998 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on March 24, 1998
at 2:00 P.M., Eastern time, and at any and all adjournments or postponements
thereof, upon the proposals listed on the reverse side of this VIF and more
fully described in the Company's Notice of Annual Meeting of Stockholders dated
February 20, 1998 and the accompanying Proxy Statement and, in its (or the
proxies') discretion, for the election of a person to the Board of Directors if
any nominee named herein becomes unable to serve or for good cause will not
serve, upon all matters incident to the conduct of the Annual Meeting, upon all
matters presented at the Annual Meeting but which were not known to the Board of
Directors at a reasonable time before the solicitation of this VIF and upon such
other business as may properly come before the Annual Meeting. THE UNDERSIGNED
UNDERSTANDS THAT THIS VIF, PROPERLY COMPLETED, MUST BE RECEIVED NO LATER THAN
5:00 P.M., EASTERN TIME, ON MARCH 19, 1998 FOR MY SHARES TO BE VOTED IN
ACCORDANCE WITH MY INSTRUCTIONS. THE UNDERSIGNED ALSO UNDERSTANDS THAT, IF I
SIGN, DATE AND RETURN THIS VIF, THE TRUSTEE OR PROXIES WILL VOTE FOR EACH
PROPOSAL FOR WHICH I DO NOT GIVE VOTING INSTRUCTIONS AND IN THE DISCRETION OF
THE TRUSTEE OR PROXIES ON ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
ANNUAL MEETING. THE UNDERSIGNED FURTHER UNDERSTANDS THAT THE TRUSTEE INTENDS TO
VOTE OR GRANT PROXIES WITH RESPECT TO ALL UNDIRECTED SHARES HELD UNDER THE PLAN
IN THE SAME PROPORTION AS THE SHARES OF ALL PLAN PARTICIPANTS WHO HAVE TIMELY
DELIVERED PROPERLY EXECUTED VOTING INSTRUCTIONS, UNLESS OTHERWISE REQUIRED BY
LAW.
PLEASE SIGN AND DATE THIS VIF ON THE OTHER SIDE.
A POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED.
UNDER THE TERMS OF THE PLAN, THE TRUSTEE WILL HOLD YOUR VOTING INSTRUCTION IN
CONFIDENCE.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THE MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
FOR ALL
1. Proposal to elect as directors all FOR WITHHOLD EXCEPT
nominees listed (except as marked [_] [_] [_]
to the contrary below):
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate FOR AGAINST ABSTAIN
of Incorporation to change the corporate [_] [_] [_]
name to "Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as the Company's [_] [_] [_]
independent auditors for the fiscal year
ending November 30, 1998.
IF YOU PLAN TO ATTEND THE [_]
ANNUAL MEETING, PLEASE
CHECK THIS BOX
Dated, , 1998
---------------------------------
Please sign name exactly as imprinted (do not print).
---------------------------------------------
Signature
- --------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
---------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR VIF TODAY!
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED VIF AND RETURN
IT PROMPTLY. TO HAVE YOUR PLAN SHARES VOTED IN ACCORDANCE
WITH YOUR DIRECTIONS, YOU MUST COMPLETE AND RETURN THE VIF
SO THAT IT IS RECEIVED NOT LATER THAN 5:00 P.M., EASTERN
TIME, ON MARCH 19, 1998.
---------------------------------------------------------------
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
1998 VOTING INSTRUCTION FORM ("VIF")
FOR MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. EMPLOYEE
STOCK PURCHASE PLAN PARTICIPANTS
Dean Witter Trust FSB, as Custodian under the Morgan Stanley, Dean Witter,
Discover & Co. Employee Stock Purchase Plan (the "Plan"), is hereby directed to
vote, as indicated on the reverse side of this VIF, in person or by proxy, all
of the shares of common stock of Morgan Stanley, Dean Witter, Discover & Co.
(the "Company") in the undersigned's Plan account at the 1998 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on March 24, 1998
at 2:00 P.M., Eastern time, and at any and all adjournments or postponements
thereof, upon the proposals listed on the reverse side of this VIF and more
fully described in the Company's Notice of Annual Meeting of Stockholders dated
February 20, 1998 and the accompanying Proxy Statement and, in its (or the
proxies') discretion, for the election of a person to the Board of Directors if
any nominee named herein becomes unable to serve or for good cause will not
serve, upon all matters incident to the conduct of the Annual Meeting, upon all
matters presented at the Annual Meeting but which were not known to the Board of
Directors at a reasonable time before the solicitation of this VIF and upon such
other business as may properly come before the Annual Meeting. THE UNDERSIGNED
UNDERSTANDS THAT, IF I SIGN, DATE AND RETURN THIS VIF, THE CUSTODIAN OR PROXIES
WILL VOTE FOR EACH PROPOSAL FOR WHICH I DO NOT GIVE VOTING INSTRUCTIONS AND IN
THE DISCRETION OF THE CUSTODIAN OR PROXIES ON ALL OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING. THE UNDERSIGNED ALSO UNDERSTANDS THAT
THIS VIF, PROPERLY COMPLETED, MUST BE RECEIVED NOT LATER THAN 5:00 P.M., EASTERN
TIME, ON MARCH 20, 1998 OR THE CUSTODIAN WILL NOT VOTE THE SHARES IN MY PLAN
ACCOUNT.
PLEASE SIGN AND DATE THIS VIF ON THE OTHER SIDE.
A POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THE MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
FOR ALL
1. Proposal to elect as directors all FOR WITHHOLD EXCEPT
nominees listed (except as marked [_] [_] [_]
to the contrary below):
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate FOR AGAINST ABSTAIN
of Incorporation to change the corporate [_] [_] [_]
name to "Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as the Company's [_] [_] [_]
independent auditors for the fiscal year
ending November 30, 1998.
IF YOU PLAN TO ATTEND THE [_]
ANNUAL MEETING, PLEASE
CHECK THIS BOX
Dated, , 1998
---------------------------------
Please sign name exactly as imprinted (do not print).
---------------------------------------------
Signature
- --------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
---------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR VIF TODAY!
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED VIF AND RETURN
IT PROMPTLY. TO HAVE YOUR PLAN SHARES VOTED IN ACCORDANCE
WITH YOUR DIRECTIONS, YOU MUST COMPLETE AND RETURN THE VIF
SO THAT IT IS RECEIVED NOT LATER THAN 5:00 P.M., EASTERN
TIME, ON MARCH 20, 1998.
---------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
1998 VOTING INSTRUCTION FORM ("VIF")
FOR MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. AND SUBSIDIARIES
EMPLOYEE STOCK OWNERSHIP PLAN PARTICIPANTS
The Northern Trust Company, as trustee (the "ESOP Trustee") under the Morgan
Stanley, Dean Witter, Discover & Co. and Subsidiaries Employee Stock Ownership
Plan (the "ESOP Plan"), is hereby directed to vote, as indicated on the reverse
side of this VIF, in person or by proxy, all of the shares of preferred stock
allocated to the undersigned's ESOP Plan account (the "ESOP Stock") at the 1998
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held
on March 24, 1998 at 2:00 P.M. Eastern time and any adjournments or
postponements thereof, and in its (or the proxies') discretion to vote for the
election of a person to the Board of Directors if any nominee named herein
becomes unable to serve or for good cause will not serve, upon all matters
incident to the conduct of the Annual Meeting, upon all matters presented at the
Annual Meeting but which were not known to the Board of Directors at a
reasonable time before the solicitation of this VIF and upon such other business
as may properly come before the Annual Meeting. THE UNDERSIGNED UNDERSTANDS
THAT, SUBJECT TO THE TERMS OF THE TRUST AGREEMENT, THE ESOP TRUSTEE WILL NOT
VOTE ANY ESOP STOCK FOR WHICH NO INSTRUCTION IS RECEIVED. THE UNDERSIGNED ALSO
UNDERSTANDS THAT THIS VIF, PROPERLY COMPLETED, MUST BE RECEIVED NOT LATER THAN
5:00 P.M., EASTERN TIME, ON MARCH 20, 1998 OR, SUBJECT TO THE TERMS OF THE TRUST
AGREEMENT, THE ESOP TRUSTEE WILL NOT VOTE THE ESOP STOCK. THE UNDERSIGNED
FURTHER UNDERSTANDS THAT THE ESOP TRUSTEE INTENDS TO VOTE OR GRANT PROXIES WITH
RESPECT TO ALL UNALLOCATED SHARES HELD UNDER THE ESOP PLAN IN THE SAME
PROPORTION AS THE SHARES OF ALL ESOP PLAN PARTICIPANTS WHO HAVE TIMELY DELIVERED
PROPERLY EXECUTED VOTING INSTRUCTIONS (WITH NEITHER AN ABSTENTION NOR
NONINSTRUCTION BEING DEEMED A VOTING INSTRUCTION TO THE ESOP TRUSTEE FOR THIS
PURPOSE), UNLESS OTHERWISE REQUIRED BY LAW.
PLEASE SIGN AND DATE THIS VIF ON THE OTHER SIDE.
A POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THE MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
FOR ALL
1. Proposal to elect as directors all FOR WITHHOLD EXCEPT
nominees listed (except as marked [_] [_] [_]
to the contrary below):
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate FOR AGAINST ABSTAIN
of Incorporation to change the corporate [_] [_] [_]
name to "Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as the Company's [_] [_] [_]
independent auditors for the fiscal year
ending November 30, 1998.
IF YOU PLAN TO ATTEND THE [_]
ANNUAL MEETING, PLEASE
CHECK THIS BOX
Dated, , 1998
---------------------------------
Please sign name exactly as imprinted (do not print).
---------------------------------------------
Signature
- --------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
---------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR VIF TODAY!
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED VIF AND RETURN
IT PROMPTLY. TO HAVE YOUR PLAN SHARES VOTED IN ACCORDANCE
WITH YOUR DIRECTIONS, YOU MUST COMPLETE AND RETURN THE VIF
SO THAT IT IS RECEIVED NOT LATER THAN 5:00 P.M., EASTERN
TIME, ON MARCH 20, 1998.
---------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS, MARCH 24, 1998
The undersigned hereby appoints Christine A. Edwards, Robert G. Scott and
Ronald T. Carman, and each of them, attorneys and proxies, with full power of
substitution, to represent and to vote on behalf of the undersigned all of the
shares of common stock of the Company which the undersigned is entitled in any
capacity to vote if personally present at the 1998 Annual Meeting of
Stockholders to be held on March 24, 1998 at the Hyatt Regency Grand Cypress
Hotel, One Grand Cypress Boulevard, Orlando, Florida, and at any adjournments or
postponements 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
for the election of a person to the Board of Directors if any nominee named
herein becomes unable to serve or for good cause will not serve, upon all
matters incident to the conduct of the Annual Meeting, upon all matters
presented at the Annual Meeting but which were not known to the Board of
Directors at a reasonable time before the solicitation of this proxy and upon
such other business as may properly come before the Annual Meeting.
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 VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THIS PROXY WILL BE VOTED AS DIRECTED. IF THIS PROXY IS SIGNED, BUT NO DIRECTION
IS MADE, IT WILL BE VOTED "FOR" ALL ITEMS SET FORTH BELOW. THE MORGAN STANLEY,
DEAN WITTER, DISCOVER & CO. BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF
THE FOLLOWING PROPOSALS:
FOR ALL
1. Proposal to elect as directors all FOR WITHHOLD EXCEPT
nominees listed (except as marked [_] [_] [_]
to the contrary below):
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate FOR AGAINST ABSTAIN
of Incorporation to change the corporate [_] [_] [_]
name to "Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as the Company's [_] [_] [_]
independent auditors for the fiscal year
ending November 30, 1998.
IF YOU PLAN TO ATTEND THE ANNUAL [_]
MEETING, PLEASE CHECK THIS BOX
Date, , 1998
---------------------------------
Please sign name exactly as imprinted (do not print). If shares
are held jointly, EACH holder should sign. Executors, adminis-
trators, trustees, guardians and others signing in a representative
capacity should indicate the capacity in which they sign. An
authorized officer may sign on behalf of a corporation and should
indicate the name of the corporation and his or her capacity.
- ------------------------------------- ---------------------------------------
Signature Co-Owner (if any) sign in the box above
- ------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR PROXY TODAY!
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY. TO HAVE YOUR SHARES VOTED IN ACCORDANCE WITH YOUR
DIRECTIONS, YOU MUST COMPLETE AND RETURN THE PROXY SO THAT IT IS
RECEIVED NOT LATER THAN 5:00 P.M., EASTERN TIME, ON MARCH 20, 1998.
------------------------------------------------------------
-------------------------------
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
1998 VOTING INSTRUCTION FORM ("VIF")
FOR MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. 1988 EQUITY INCENTIVE
COMPENSATION PLAN, 1995 EQUITY INCENTIVE COMPENSATION PLAN
AND EMPLOYEES' EQUITY ACCUMULATION PLAN PARTICIPANTS
State Street Bank and Trust Company, as trustee (the "Trustee") under the Trust
Agreement dated as of April 1, 1994, as amended, is hereby directed to vote, as
indicated on the reverse side of this VIF, in person or by proxy, all of the
shares of Common Stock of the Company allocated to the undersigned pursuant to
the Company's 1988 Equity Incentive Compensation Plan, as amended, the Company's
1995 Equity Incentive Compensation Plan, as amended, or the Company's Employees'
Equity Accumulation Plan, as amended (the "EICP Stock"), not subject to any
voting agreement, at the 1998 Annual Meeting of Stockholders of the Company (the
"Annual Meeting") to be held on March 24, 1998 at 2:00 P.M., Eastern time and
any adjournments or postponements thereof, and in its (or the proxies')
discretion to vote for the election of a person to the Board of Directors if any
nominee named herein becomes unable to serve or for good cause will not serve,
upon all matters incident to the conduct of the Annual Meeting, upon all matters
presented at the Annual Meeting but which were not known to the Board of
Directors at a reasonable time before the solicitation of this VIF and upon such
other business as may properly come before the Annual Meeting. THE UNDERSIGNED
UNDERSTANDS THAT THE TRUSTEE WILL NOT VOTE ANY EICP STOCK FOR WHICH NO
INSTRUCTION IS RECEIVED. THE UNDERSIGNED ALSO UNDERSTANDS THAT THIS VIF,
PROPERLY COMPLETED, MUST BE RECEIVED NOT LATER THAN 5:00 P.M., EASTERN TIME, ON
MARCH 20, 1998 OR THE TRUSTEE WILL NOT VOTE THE EICP STOCK.
PLEASE SIGN AND DATE THIS VIF ON THE OTHER SIDE.
A POSTAGE-PAID RETURN ENVELOPE IS ENCLOSED.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS
IN THE EXAMPLE USING
BLACK OR BLUE INK
THE MORGAN STANLEY, DEAN WITTER, DISCOVER & CO. BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
FOR ALL
1. Proposal to elect as directors all FOR WITHHOLD EXCEPT
nominees listed (except as marked [_] [_] [_]
to the contrary below):
NOMINEES: Robert P. Bauman, Edward A. Brennan, Diana D. Brooks and
Clarence B. Rogers, Jr.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" box and strike a line through the nominee's name.
2. Proposal to amend the Company's Certificate FOR AGAINST ABSTAIN
of Incorporation to change the corporate [_] [_] [_]
name to "Morgan Stanley Dean Witter & Co."
3. Proposal to ratify the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP as the Company's [_] [_] [_]
independent auditors for the fiscal year
ending November 30, 1998.
IF YOU PLAN TO ATTEND THE [_]
ANNUAL MEETING, PLEASE
CHECK THIS BOX
Dated, , 1998
---------------------------------
Please sign name exactly as imprinted (do not print).
---------------------------------------------
Signature
- --------------------------------------------------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE DETACH AT PERFORATION ALONG DOTTED LINE
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
---------------------------------------------------------------
IMPORTANT
PLEASE SEND IN YOUR VIF TODAY!
YOU ARE URGED TO DATE AND SIGN THE ENCLOSED VIF AND RETURN
IT PROMPTLY. TO HAVE YOUR PLAN SHARES VOTED IN ACCORDANCE
WITH YOUR DIRECTIONS, YOU MUST COMPLETE AND RETURN THE VIF
SO THAT IT IS RECEIVED NOT LATER THAN 5:00 P.M., EASTERN
TIME, ON MARCH 20, 1998.
---------------------------------------------------------------
<PAGE>
MORGAN STANLEY, DEAN WITTER, DISCOVER & CO.
1585 BROADWAY
NEW YORK, NEW YORK 10036
February 20, 1998
Dear Employee Stockholder:
You are entitled to participate in the Preliminary Vote of certain of the
Company's employee stockholders concerning the matters to be voted on at the
Company's 1998 Annual Meeting of Stockholders. The Preliminary Vote will be
taken on Thursday, March 12, 1998. A proxy/voting directive card and the Proxy
Statement describing the matters to be voted on in the Preliminary Vote and at
the Annual Meeting are enclosed. Kindly complete, sign and return the
proxy/voting directive card in the enclosed envelope on or before March 12,
1998.
The outcome of the Preliminary Vote will determine how shares of the
Company's Common Stock that are subject to the Preliminary Vote will be voted
at the Annual Meeting, so it is essential that you vote in the Preliminary
Vote. At the Annual Meeting, the following procedures will apply to shares of
Common Stock subject to the Preliminary Vote.
. All of the shares of Common Stock held in the Company's "rabbi" trust
holding shares subject to the Preliminary Vote, including shares
corresponding to your stock units, will be voted at the Annual Meeting by
State Street Bank and Trust Company, as Trustee of the "rabbi" trust, in
accordance with the vote of the majority of the Common Stock voted in the
Preliminary Vote.
. If you wish to vote any shares of Common Stock you own that are subject
to the Preliminary Vote, you must grant an irrevocable proxy to Christine
A. Edwards, Robert G. Scott and Ronald T. Carman to vote such shares at
the Annual Meeting in accordance with the vote of the majority of the
Common Stock voted in the Preliminary Vote on all matters submitted to
the Preliminary Vote and in the proxies' discretion on any other matter
properly coming before the Annual Meeting. You will not be able to vote
your shares of Common Stock subject to the Preliminary Vote in any other
manner.
By completing, signing and returning the enclosed proxy/voting directive card,
you are participating in the Preliminary Vote and granting the proxy.
If you own shares of Common Stock that are not subject to the Preliminary
Vote, or if you have shares of ESOP Stock allocated to you in the ESOP, you
may vote these shares in your discretion at the Annual Meeting. You should
receive separate mailings containing materials (e.g., proxy or voting
directive card, and the Company's 1997 Annual Report to Stockholders) so you
can vote these shares. ESOP Stock may be voted by directing The Northern Trust
Company, as Trustee of the ESOP, to vote. Common Stock that is not subject to
the Preliminary Vote may be voted in the manner described in the Proxy
Statement. If you own Common Stock that is not subject to the Preliminary
Vote, or if you have ESOP Stock allocated to you, and you have not received
the appropriate mailings, please contact Investor Relations at (212) 762-8131.
Of course, you are welcome to attend the Annual Meeting. Thank you for your
participation in the Preliminary Vote.
Very truly yours,
/s/ Philip J. Purcell /s/ John J. Mack
Philip J. Purcell John J. Mack
Chairman and Chief Executive Officer President and Chief Operating
Officer
