Good morning. This is Martin Cohen, Corporate Secretary of Morgan Stanley. Welcome to our 2024 Annual Meeting of Shareholders. This presentation by Morgan Stanley is copyrighted and proprietary, and all rights are reserved. Any recording, rebroadcast, or other use of this presentation in whole or in part, without the prior written consent of Morgan Stanley is strictly prohibited. Today's meeting may include forward-looking statements. Please refer to our proxy statement, annual report on Form 10-K, quarterly reports on Forms 10-Q, and current reports on Forms 8-K, for risks and uncertainties regarding such statements. If we experience technical difficulties that prevent us from continuing our virtual meeting today, the polls will be closed immediately, and votes received prior to the closing of the polls will be counted. The meeting will not be reconvened, and the vote results will be announced publicly.
Good morning, everyone. I'm James Gorman, Chairman of Morgan Stanley. I'll now call the annual meeting to order. On behalf of my fellow directors, I'd like to welcome you all, and thank you for joining us. With me today is Ted Pick, our Chief Executive Officer, Eric Grossman, our Chief Legal Officer and Chief Administrative Officer, and Sharon Yeshaya, our Chief Financial Officer, and of course, you just heard from Marty Cohen, our Vice President, Counsel, and Corporate Secretary. The director nominees who are standing for election with Ted and me today are also on the line. Their bios and board committee membership are set forth in our proxy statement, which is available on the virtual meeting website.
The directors include Tom Glocer, our independent lead director, Megan Butler, our newest director, Bob Herz, our chair of our audit committee, Erica James, Hironori Kamezawa, Shelley Leibowitz, Stephen Luczo, Jami Miscik, who chairs our operations and technology committee, Masato Miyachi, Dennis Nally, who chairs the Compensation, Management, Development, and Succession Committee, Mary Schapiro, Perry Traquina, chair of the Risk Committee, and finally, Rayford Wilkins, chair of the Governance and Sustainability Committee. We were deeply saddened by the passing of Lord Alistair Darling on November thirtieth of 2023. Alistair served on our board with distinction from 2016 to 2023, and was a member of both the audit committee and the risk committee. The board acknowledges Alistair's distinguished service and many, many contributions to Morgan Stanley. Please welcome me now and wel- and...
Please join me now in welcoming Megan Butler, who's standing for election to the board today. Megan brings to the board an extensive background in legal and regulatory matters, including her leadership roles at the U.K. Prudential Regulation Authority, the PRA, and the Financial Conduct Authority, the FCA. In financial services, as well as her service as an independent, non-executive director on our U.K. subsidiary boards of directors. I'd also like to introduce Tom Walker and Charles Sayre, who are partners of Deloitte and Touche, our independent auditor, and they're available to answer your questions. I would like to thank the board, past and present, for their extraordinary support and guidance during my tenure as CEO. Over the course of a 14-year journey, they've positioned Morgan Stanley for long-term success.
In addition to providing strong leadership over the duration of my tenure, your board led a multi-year, methodical, intentional succession process that resulted in the appointment of Ted Pick as CEO. Leadership transitions are very important to a well-functioning and innovative organization. The board's focus and intentionality made this transition happen very smoothly. My role as chairman is to chair the board, support our client activities around the world, and use this time to advise Ted as he settles into the CEO role. He is off to an excellent start, and he's ably supported by his co-presidents, Andy Saperstein and Dan Simkowitz. I'm truly delighted by the unusually smooth transition, and again, compliment our board for their extraordinary hard work. Given this successful transition, it's appropriate to confirm that I will formally step down as chairman of Morgan Stanley on December 31 of this year.
As this will be my last shareholder meeting, let me say to you, our shareholders, how deeply appreciative I am for your support over these many years. It has been a great honor to serve as your Chairman and CEO. Thank you. Now, Ted will provide some strategic remarks.
Good morning. 2023 was marked by geopolitical tensions, higher and uncertain rate paths, and tighter credit conditions. Despite this challenging market backdrop, Morgan Stanley delivered solid results, reporting annual net revenues of $54.1 billion, net income of $9.1 billion, and return on average tangible common equity of 12.8%.
...Thanks to James Gorman's vision and leadership, the strategic decisions made over the past 15 years have transformed Morgan Stanley's business model. Our business mix, scale, profitability, and returns have diversified meaningfully and improved significantly. Today, our strategy is sound, and it is working. While there has been a change in leadership, there is no change in strategy. Our firm has a clear and consistent business purpose: to act as a trusted advisor to clients globally, helping them raise, manage, and allocate capital. This is what we do. We do it well, and our mission is to do it even better as an integrated firm. Our wealth and investment management businesses together held $6.6 trillion in client assets at the end of last year.
At a holistic level, the wealth management and investment management businesses have achieved the kind of scale which enables us to invest in serving clients and to take further market share through business cycles. Our goal is to grow these assets to 10 trillion and beyond. The combination of scale and diversification in these businesses positions us well strategically for long-term growth. Institutional Securities is a preeminent franchise with an extensive global client footprint and capability set. Our teams across geographies, businesses, and client segments put us at the center of global capital allocation and formation. We are a trusted advisor to important corporations, asset managers, and asset owners around the world. We expect the next economic and financial cycle to be led by corporate finance activity across industries and regions, which will drive investment banking growth.
As one of the few full-service global investment banks, we expect to benefit disproportionately from growth into the next cycle. The combination of our industry-leading wealth management and investment management platforms with our world-class institutional securities franchise, delivers a business model with scale and durability. We have a global diversified business with a leading client, client franchise. I'm excited about the growth opportunities ahead. Combining our wealth management and investment management platforms with our leading institutional securities franchise unlocks the unique power of the integrated firm. The future growth and long-term success of the integrated firm will also be driven by the depth and talent of our human capital, coupled with the Morgan Stanley core values that guide our managing directors and all of our employees. We will continue to invest in our people and our culture, and we are committed to a diverse and inclusive environment.
We're also focused on the state of our financial capital and diligently managing resources to realize operating leverage. Given the deliberate growth in our durable earnings over the last several years, our capital position is strong, providing us with flexibility as regulators evaluate Basel III Endgame. At the end of 2023, our CET1 ratio was 15.2%. We returned more than $10 billion in capital last year through dividends and stock repurchases. The first quarter of 2024 was strong. Investor sentiment improved and clients were engaged. Our integrated firm delivered a 20% return on average tangible common equity, demonstrating the durability of our business model when markets are active. Client assets across our wealth and investment management businesses reached $7 trillion. I remain optimistic about the ability of our core businesses to deliver durable growth in 2024 and beyond.
We have momentum in every part of the franchise and in each region and major geography, and are well positioned for the long term. I am confident in our management team. It is unmatched, both in its integrity and in its intensity. I would like to take the opportunity to acknowledge the support, guidance, and commitment of our tremendous board of directors. I look forward to working closely with them to position our firm for continued success. And I would also like to thank James again for his strategic vision and extraordinary leadership in steering Morgan Stanley to success. And I would also add, James, my own appreciation for your mentorship and for your personal example. And to all of you, thank you for your ownership and support of Morgan Stanley.
Thank you, Ted and James. Thank you to our shareholders joining us today.
American Election Services, the inspector for elections for this meeting, is represented by Christopher Woods. The Inspector of Elections has taken the oath of office, and a copy of his oath will be filed with the meeting minutes. He has determined that we have a quorum to conduct business at this meeting. First, I will review the meeting rules and procedures. Then we will consider the proposals that are being voted on, and I will deliver the preliminary report of the Inspector of Elections. That will conclude our formal meeting. As set forth in our meeting rules that are posted on the virtual meeting website, shareholders may submit questions pertaining to the proposals by typing them in the space provided on the virtual meeting screen. Shareholders may also submit questions on topics other than the proposals being voted on that will be addressed during the general question and answer session.
In order to give as many shareholders as possible the opportunity to ask questions, we ask that shareholders limit themselves to two questions. If we receive questions from multiple shareholders on substantially the same topic or that are otherwise related, we may group such questions and provide a single response to avoid repetition.
... Please limit your questions to a few sentences. We may paraphrase or summarize lengthy questions. We ask that shareholders include their name and, if applicable, their company in the field provided when submitting questions. Per our meeting rules, questions that are submitted anonymously will not be addressed. I now move the following company-sponsored proposals that appear in the proxy statement. The election of your directors, the ratification of the Audit Committee's appointment of Deloitte & Touche LLP as the company's independent auditor for 2024, the approval of compensation of executives as disclosed in the proxy statement, and the approval of the Non-U.S., Non-Qualified Employee Stock Purchase Plan. Next are the shareholder proposals. Mr. William Flagg of Ridgeline Research submitted an audio presentation for the shareholder proposal, requesting a report on risks of politicized debanking.
Good morning, shareholders and board members. My name is William Flagg, founder and CEO of Ridgeline Research, the investment advisor to the American Conservative Values ETF, ticker symbol ACVF. On behalf of its shareholders, I move for shareholder proposal number five, requesting a report assessing whether Morgan Stanley has adequate safeguards to prevent politicized debanking. Shareholders request the board of directors to conduct an assessment and issue a report evaluating how it oversees risks related to discrimination against individuals based on factors such as social, political, or religious views, as well as race, color, religion, sex, national origin, and whether such discrimination may impact individual civil rights. We are concerned with recent evidence of religious and political discrimination against customers by companies in the financial services industry.
The 2023 edition of the Viewpoint Diversity Business Index shows that many of the largest financial institutions include vague and subjective grounds to deny service like reputational risk, social risk, misinformation, hate speech, or intolerance. These kinds of terms allow financial institutions to deny or restrict services for arbitrary or discriminatory reasons. When companies engage in this kind of discrimination, they hinder the ability of Americans to access the marketplace, undermining the fundamental freedoms of our country. Politicized debanking can also damage a company's reputation, which negatively impacts shareholder value. This is a pro-shareholder proposal. This previously underappreciated risk exists for all financial services companies and needs to be recognized by shareholders and their representative boards. In the recent past, we have witnessed shareholders advocate for J.P. Morgan Chase, Mastercard, PayPal, Capital One, and Charles Schwab to assess whether they have adequate safeguards to prevent politicized debanking.
19 states' attorney general and 14 state financial officers specifically called out J.P. Morgan Chase, which likely damaged their reputation and ability to operate in favorable regulatory environments. I encourage all shareholders to vote for Shareholder Proposal Five, requesting a report on the risks of politicized debanking. Thank you.
Thank you. Next, Mr. John Cheveden will now present the shareholder proposal regarding transparency and lobbying.
Hello, this is John Cheveden. Proposal Six, transparency and lobbying. I move Proposal Six, asking Morgan Stanley to provide a report on its state and federal lobbying expenditures, including indirect funding of lobbying through trade associations and social welfare groups. Shareholders are asking companies to disclose all dark money payments to third-party groups that use that money to influence policy. Morgan Stanley fails to do this. Morgan Stanley does not issue a comprehensive report of its own direct lobbying. That data is scattered among federal and state regulators and is difficult to obtain. We know that for its direct lobbying, Morgan Stanley has spent over $40 million in federal lobbying since 2010, and there's incomplete disclosure about Morgan Stanley spending at the state level, where finding this information is nearly impossible.
Morgan Stanley is required to report its lobbying and already has this information, so it could easily be provided to shareholders. This proposal seeks full disclosure of dark money payments to trade associations or social welfare groups where there are no limits or disclosure requirements. Morgan Stanley shareholders face a huge blind spot here. Trade associations spend hundreds of millions to lobby. The U.S. Chamber of Commerce has spent more than $1.8 billion since 1998. Morgan Stanley lists membership in 13 trade associations, but fails to disclose any of its payments used for lobbying. Morgan Stanley belongs to the American Bankers Association, the Business Roundtable, Chamber of Commerce, and SIFMA, which together spent over $106 million in federal lobbying for 2023. How large are Morgan Stanley's payments used for lobbying? Shareholders do not know, and that's a problem.
Many of Morgan Stanley's trade association lobbying positions contradict Morgan Stanley's public policy positions, resulting in values misalignment and reputation risk. For example, Morgan Stanley publicly supports addressing climate change, yet the Business Roundtable opposed the Inflation Reduction Act with its historic investments in climate action... and the chamber reportedly has been a central actor against climate legislation for over two decades. Morgan Stanley also fails to disclose its payments to 501(c)(4) social welfare organizations, which also lobby. For example, Center Forward is a 501(c)(4), which has pushed to weaken bank capital requirements. Does Morgan Stanley make contributions to dark money social welfare groups like Center Forward? Shareholders have no way to know. Lobby disclosure is a safety mechanism for Morgan Stanley, its reputation, and shareholders, as what gets disclosed, gets managed.
Full disclosure of Morgan Stanley's lobbying, including all third-party payments, will ensure proper oversight of Morgan Stanley's lobbying and ask shareholders to vote for this proposal, transparency and lobbying, Proposal Six.
Thank you. Next, Mr. Mike Garland of the New York City Comptroller's Office submitted an audio presentation for the shareholder proposal requesting disclosure of a Clean Energy Supply Financing Ratio.
Good morning. I'm Mike Garland, Assistant Comptroller for Corporate Governance and Responsible Investment in the Office of New York City Comptroller Brad Lander. I am presenting Proposal Seven on behalf of New York City pension funds, with more than $150 million invested in Morgan Stanley's long-term success. Proposal Seven requests that Morgan Stanley disclose the ratio of its financing for low carbon energy supply relative to fossil fuel energy supply, including its methodology. This ratio would provide investors a single metric to track the company's progress on the two actions that science indicates are needed to avoid the worst climate change impacts: a threefold increase in global annual clean energy investment by 2030, and a rapid transition away from fossil fuels.
We welcome Morgan Stanley's commitments to achieve net zero financed emissions by 2050 and allocate $750 billion to low carbon and green solutions. Investors need more information to assess the bank's financing specific to the supply of low carbon energy and to place it in context. Disclosure of the proposed ratio would complement and supplement Morgan Stanley's current disclosures. The company's disclosure of its financed emissions, while essential to investors, entails data availability and reliability challenges. Additionally, its disclosure of the $550 billion deployed in low carbon and green solutions through 2022 lacks specificity on the financing of low carbon energy. The company's reported financing not only encompasses low carbon energy, it also includes clean mobility, carbon reduction and removal, energy efficiency, and climate adaptation.
Investors are thus unable to assess the company's financing of low carbon energy supply relative to its financing of fossil fuel energy supply. The board argues that disclosing its ratio would be imprudent since there is no standardized methodology. As the board is aware, Bloomberg has developed methodologies to calculate the ratio, which it uses to publicly disclose an estimated ratio for Morgan Stanley. The board warns that the company may encounter criticism if it discloses a ratio that differs from Bloomberg's estimate. The ratio that Bloomberg discloses for Morgan Stanley relies on commercial databases and estimates rather than company reporting. For investors, a ratio calculated by the company itself, not third parties, would be more reliable and decision useful. In response to constructive engagement, Citi, J.P. Morgan, and RBC have committed to disclose their clean energy financing ratio and methodology, demonstrating the feasibility and growing momentum for ratio disclosure.
We call on the board to reconsider its opposition and enable Morgan Stanley to join those banks that are leaders in energy supply financing transparency. Today, we urge shareholders to vote for Proposal Seven. Thank you.
Thank you. The board of directors recommends that stockholders vote against these proposals for the reasons set forth in our proxy statements. All proposals on the agenda are now before the meeting. We will now address any questions on the proposals. I will turn it over to Eric Grossman, our Chief Legal Officer and Chief Administrative Officer. Eric, do we have any questions on the proposals?
Yes, Marty, we have two questions from Jerry Bowyer on the proposals. First question from Mr. Bowyer is, "What steps does the company take to ensure respect for political and religious viewpoint diversity in the internal elements with respect to our employee training?" And the second question from Mr. Bowyer is: "What tangible steps is the company taking to ensure respect for political viewpoint diversity in these training elements?" And what I would say to Mr. Bowyer is that the company's response to these questions and its policies are set forth in our proxy. And if I could also just take this opportunity to let shareholders know that under our rules of conduct, questions cannot be submitted anonymously.
We've received a few of those, and I would ask those shareholders to submit with their name. Thank you very much. Other than that, Marty, no further questions.
The voting has now ended, and the polls are closed. I will now present the preliminary report of the Inspector of Elections. The preliminary report of the Inspector of Elections indicates that. On average, 98% of the votes cast for and against have voted for the election of each director nominee. Approximately 97% of the votes cast have voted for the ratification of the audit committee's appointment of Deloitte & Touche LLP as the company's independent auditor for 2024. Approximately 75% of the votes cast have voted for the approval of the compensation of executives, as disclosed in the proxy statement. Approximately 99% of the votes cast have voted for the approval of the Non-U.S. Non-Qualified Employee Stock Purchase Plan. Approximately 1.2...
I'm sorry, approximately 2% of the votes cast have voted for the approval of the shareholder proposal, requesting a report on risks of politicized debanking. Approximately 31% of the votes cast have voted for the approval of the shareholder proposal regarding transparency and lobbying. Approximately 23% of the votes cast have voted for the approval of the shareholder proposal, requesting disclosure of a Clean Energy Supply Financing Ratio. That summarizes the preliminary report of the Inspector of Elections. The official report of the Inspector of Elections will be reported on a Form 8-K filed with the SEC.
Thank you, Marty. Congratulations to my fellow directors, and thank you, shareholders, for your continued support. That concludes the formal part of our annual meeting, and the annual meeting is now adjourned. We will now proceed to the general question and answer session. I will turn it over to Eric Grossman, our Chief Legal Officer and Chief Administrative Officer. Eric, do we have any questions?
We do, Mr. Chairman. We have one question from shareholder Adele Shraiman. I apologize if I've mispronounced Ms. Shraiman's name. Question: Morgan Stanley's August 2023 environmental and social policy statement states that by 2025, the bank will not provide lending, capital markets, or advisory services to any company with greater than 20% of revenue from thermal coal mining. In the meantime, would the firm finance an undiversified coal company such as Whitehaven Coal in Australia or Adaro in Indonesia, companies with thermal coal expansion plans that meet the criteria for exclusion after 2025? Ted.
Thank you. Thank you for your question. Any such company would be evaluated to see if it is consistent with our existing policies, and even if it is consistent, it would then be reviewed by our Global Franchise Committee. We support the transition to a low-carbon economy. We engage with all of our clients to help them navigate toward these objectives. We report our progress in our annual ESG report, which can be found on morganstanley.com. And again, we are committed to achieving net zero finance emissions by 2050. Thank you.
There are no further shareholder questions, and so that concludes our question and answer session, Mr. Gorman.
Well, my goodness, I'm finishing on the fastest shareholder meeting we've had in 15 years. So I think it's appropriate, given the stellar start that my successor has already made. I wish all our shareholders the best for the years ahead. I remain extremely confident in this great company, and I thank you all for your support. Our board is honored to serve you. Thank you, everyone.
Thank you for joining. The call is concluded.