Morgan Stanley Chairman John Mack, Chief Executive Officer James Gorman and other executives won a dismissal of a shareholder lawsuit filed over $45 billion paid to the firm's employees over three years.
New York State Supreme Court Justice Shirley Werner Kornreich threw out the suit, citing a requirement that shareholders first make a demand on a board before suing on behalf of a company or show that such a move would be futile, according to a Dec. 10 decision.
The complaint said employee compensation during 2006, 2007 and 2009 was "unconscionable" given the firm's performance, including its reliance on a government bailout. The shareholders argued in court papers that making a demand on Morgan Stanley's board would have been futile because its members were "beholden" to the firm. Kornreich rejected that argument, saying the plaintiffs didn't show that the board couldn't make disinterested decisions.
