July 22, 2005

Morgan Stanley Board Sued Over Severance Packages

On Tuesday, the Central Laborers’ Pension Fund filed a derivative lawsuit in the U.S. District Court of the Southern District of New York against the Morgan Stanley board over the recent severance packages received by outgoing CEO Phillip Purcell and Co-President Stephen Crawford (as well as claims related to other lawsuits that Morgan Stanley recently lost). Heads up – Bill Lerach represents the fund!

Not too surprising this lawsuit was brought given what was noted in this blog last week. And after receiving a letter from AFSCME, Morgan Stanley’s lead director has scheduled a meeting with the union to discuss pay-for-performance and other issues.

Learn more about why severance arrangements are so vulnerable today – and under attack from institutional investors – and how to protect your company from exposure in our “Severance Arrangements” Practice Area on This also will be an area of focus at the “2nd Annual Executive Compensation Conference.”

Last Call for Paper Stock Certificates

Effective August 1st, due to recent amendments to Section 158 of the Delaware General Corporation Law, companies incorporated in Delaware will no longer be required to make a paper certificate available to shareholders. Outstanding paper certificates are not affected until they are submitted for transfer or other re-issue, or are reported lost. Companies can then convert those shares to uncertificated shares. Of course, Delaware companies are free to continue issuing paper certificates.

Another Stat for the Auditing “Too Big to Fail” Debate

Following up on an earlier blog on KPMG’s troubles, in this article, J.D. Power and Associates reports that last year, almost one in every eight public companies employed three or more Big Four firms for audit and non-audit work – as the larger companies might use auditing firms for all different types of work, including auditing, internal financial control testing, acquisition analysis, software work, and tax and valuation work.