It looks like Philip Purcell will remain chairman and chief executive of Morgan Stanley after its board of directors decided not to make any management changes.
The board did institute a number of corporate governance changes, however, that ultimately will make it easier for unhappy shareholders to replace board members.
Morgan Stanley said it would accelerate its plans, announced earlier this year, to eliminate its three classes of board members, who currently stand for re-election in different years. Beginning with the 2006 annual meeting, all directors will stand for election every year.
It is widely felt that a staggered board makes it tougher for unwanted suitors to launch a successful proxy fight in any single year. Generally it would take at least two years to mount a successful takeover.
Morgan Stanley agreed to create the new position of lead director, , which it plans to fill shortly, as a compromise with governance advocates in lieu of separating the positions of chairman and CEO.
Other governance changes approved by the board:
• Adding two outside directors, expanding the board to 15 directors in all
• Requiring only a simple majority vote by the board, not a supermajority, to remove the chief executive officer
• Requiring all directors to retire at age 72;
• Broadening of the compensation committee’s charter to include oversight of plans for management development and succession;
• Instituting the practice of rotating board committee chairs beginning with the June meeting