Administration September 2, 2006

Morgan Stanley's Pension Strategies Group Gains New Focus

February 21, 2005 (PLANSPONSOR.com) - Morgan Stanley has reassigned members of its former Pension Strategies Group (PSG) to a broader institutional-side unit.
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While a company official contended that the move was made as part of a refocusing to allow Morgan Stanley to more effectively sell the institutional clients a broader range of products and services, sources say that the firm’s increasing unwillingness to take on risk in its transition and structured solutions area undermined the business logic of the PSG.

In an interview with PLANSPONSOR.com , managing director Barry Davis said the new Asset Owner unit is made up of about 20 people including two members of the original PSG. “Our clients’ needs are changing,” Davis said. “There are (answers to) many needs the firm was not bringing to this client base.”

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While PSG members offered a more focused goods and services lineup, Davis said Morgan Stanley decided that the pension and foundation/endowment clients needed additional options. “(The PSG) was only doing some of that,” he said “We are aware that just some is not good enough anymore. The holistic approach around (meeting) the client’s needs is the way to go.”

For example, Davis said the company wants to offer a broader range of research capabilities including on the difficult subject of Social Security reform and its impact on pensions. “The firm is going to put in more effort (into providing research products) given how important this is to our clients – the whole pension and Social Security issue,” Davis said.

PSG had been headed by managing director Sarah Orsay and was focused in general on delivering value-added information to large pension funds, and in particular on providing transition services.Orsay has moved to Goldman Sachs, where she is currently a managing directorin the pension services group. Other members of the Morgan Stanley group have been moved to other parts of the firm, officials there say.

Administration September 1, 2006

Siebel Systems Institutes Compensation Reform, Praised by CalPERS

January 21, 2005 (PLANSPONSOR.com) - Siebel Systems Inc., bowing to investor pressure, has altered its executive compensation and bonus systems, earning the praise of pension giant California Public Employees' Retirement System (CalPERS) in the process.
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The software company, after settling a case involving stock options with the Teachers’ Retirement System of Louisiana, has opted to change the structure of its compensation system so that it is tied more to financial performance than in the past, according to the Wall Street Journal (See Pension Fund Charges Firm With Option Violations, Cover-up ). The reforms, disclosed in an SEC filing, tie stock-option awards and bonuses to financial criteria such as revenue growth and improvements in operating margins, as well as customer satisfaction. When targets are hit, options will become vested, and bonus sizes will be determined.

Pension giant CalPERS – which is active in corporate governance and other activist investment causes – has praised the move. “I saw a very significant change in attitude” at the company, Ted White, CalPERS” portfolio manager for corporate governance, told the Journal. “This is further than most technology companies, and most big companies, want to go.” The Siebel reforms came after over a year of discussions with CalPERS.

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CalPERS has worked with others on the same issue, including JDS Uniphase Corp. and Walt Disney Co (See JDS Uniphase Linking Stock Options to Performance ).

Siebel’s change did not come without past problems, however. In 2002, the Louisiana pension fund filed suit against the company, alleging that over $1 billion in options was improperly awarded to the company’s founder, Tom Siebel (See Siebel Corporate Reforms Set in Pension Fund Suit Settlement ). Denying that it did anything wrong, the company settled in 2003. In the same year, the company fought to keep a TIAA-CREF shareholder proposal that sought to tie compensation to performance off the table. The proposal was ultimately voted down by shareholders.

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