Morgan Stanley 2014 Annual Report Download - page 109

Capital Management.
The Company’s senior management views capital as an important source of financial strength. The Company
actively manages its consolidated capital position based upon, among other things, business opportunities, risks,
capital availability and rates of return together with internal capital policies, regulatory requirements and rating
agency guidelines and, therefore, in the future may expand or contract its capital base to address the changing
needs of its businesses. The Company attempts to maintain total capital, on a consolidated basis, at least equal to
the sum of its operating subsidiaries’ required equity.
In March 2014, the Company received no objection from the Federal Reserve to the Company’s 2014 capital
plan, which included a share repurchase of up to $1 billion of the Company’s outstanding common stock
beginning in the second quarter of 2014 through the end of the first quarter of 2015, as well as an increase in the
Company’s quarterly common stock dividend to $0.10 per share from $0.05 per share, beginning with the
dividend declared on April 17, 2014. During 2014 and 2013, the Company repurchased approximately
$900 million and $350 million, respectively, of the Company’s outstanding common stock as part of its share
repurchase program (see Note 15 to the Company’s consolidated financial statements in Item 8).
At December 31, 2014, the Company had approximately $0.3 billion remaining under its current share
repurchase program. The share repurchase program is for capital management purposes and considers, among
other things, business segment capital needs as well as equity-based compensation and benefit plan requirements.
Share repurchases under the Company’s existing authorized program will be exercised from time to time at
prices the Company deems appropriate subject to various factors, including the Company’s capital position and
market conditions. The share repurchases may be effected through open market purchases or privately negotiated
transactions, including through Rule 10b5-1 plans, and may be suspended at any time. Share repurchases by the
Company are subject to regulatory approval (see also “Market for Registrant’s Common Equity, Related
Shareholder Matters and Issuer Purchases of Equity Securities in Part II, Item 5). The share repurchase program
has no set expiration or termination date.
The Company’s Board of Directors determines the declaration and payment of dividends on a quarterly basis.
The cash dividends declared on the Company’s outstanding preferred stock were $311 million, $271 million and
$97 million in 2014, 2013 and 2012, respectively. On January 20, 2015, the Company announced that its Board
of Directors declared a quarterly dividend per common share of $0.10. The dividend was paid on February 13,
2015 to common shareholders of record on January 30, 2015 (see Note 25 to the Company’s consolidated
financial statements in Item 8).
Issuances of Preferred Stock.
Series G Preferred Stock. On April 29, 2014, the Company issued 20,000,000 Depositary Shares for an
aggregate price of $500 million. Each Depositary Share represents a 1/1,000th interest in a share of perpetual
6.625% Non-Cumulative Preferred Stock, Series G, $0.01 par value (“Series G Preferred Stock”). The Series G
Preferred Stock is redeemable at the Company’s option (i) in whole or in part, from time to time, on any dividend
payment date on or after July 15, 2019 or (ii) in whole but not in part at any time within 90 days following a
regulatory capital treatment event (as described in the terms of that series), in each case at a redemption price of
$25,000 per share (equivalent to $25.00 per Depositary Share). The Series G Preferred Stock also has a
preference over the Company’s common stock upon liquidation. The Series G Preferred Stock offering (net of
related issuance costs) resulted in proceeds of approximately $494 million.
Series H Preferred Stock. On April 29, 2014, the Company issued 1,300,000 Depositary Shares for an
aggregate price of $1,300 million. Each Depositary Share represents a 1/25th interest in a share of perpetual
Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series H, $0.01 par value (“Series H Preferred Stock”).
The Series H Preferred Stock is redeemable at the Company’s option (i) in whole or in part, from time to time, on
any dividend payment date on or after July 15, 2019 or (ii) in whole but not in part at any time within 90 days
following a regulatory capital treatment event (as described in the terms of that series), in each case at a
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