Saturday, May 21, 2005
Things at venerable Wall Street investment bank and brokerage firm Morgan Stanley aren't going particularly well these days. There is a fight between the old guard from the investment banking side of the firm (called the "Group of 8") seeking the ouster of CEO Phillip Purcell, who comes from the brokerage side of the firm (Dean Witter and all those nattering clients). This week, a jury in Florida hit the firm with a $1.45 billion judgment for defrauding Ronald Perelman in the sale of Coleman Co. to Morgan Stanley client Sunbeam (see earlier posts here and here), a corporation the was cooking its books while buying the maker of (among other things) grills -- there's something ironic in there, but I'll leave it be for now. So, when things go bad, what's a company to do? Why, try to punish the media for reporting all this information, of course, and make sure former employees say good things about you.
From the blog PR Machine (here) comes an amendment Morgan Stanley is sending to media outlets at which it purchases advertising: "In the event that objectionable editorial coverage is planned, agency must be notified as a last-minute change may be necessary. If an issue arises after-hours or a call cannot be made, immediately cancel all Morgan Stanley ads for a minimum of 48 hours." God forbid the media be critical of a company that keeps shooting itself in the foot . . . oops, I think that's objectionable editorial coverage. Darn!
In order to maintain support among even its departed troops, Morgan Stanley revealed the following terms of a severance agreement with two former senior investment bankers, one of whom is the highly regarded Joseph Perella, that explains what is meant by "good behavior" to earn a bonus payout from the firm (Form 8-K here):
"Good Behavior" means that (1) through December 31, 2005 (a) the individual has not committed any act that would constitute a "Cancellation Event" (as defined in the applicable settlement and release agreement) and (b) unless waived in writing by the Board of Directors of the Company, the individual will not support or associate himself with the so-called "Group of 8" or become part of any management team sponsored by such group and (2) through the Termination Date the individual (a) proactively assists in key employee retention efforts, (b) supports the Company and his colleagues in a positive manner, (c) assists in client relationship efforts where helpful or necessary, (d) remains employed by the Company (unless sooner terminated by the Company) and (e) assists in the orderly transition of his duties.
One for all and all for one, especially when it's worth a $6.4 million bonus. (ph)