Shareholders in Morgan Stanley lashed out at the $51m (£29m) severance package for the ousted chief executive Philip Purcell and inflicted an embarrassing defeat on the new board at the investment bank's annual meeting yesterday.
They defied the new chief executive John Mack to vote that, in future, all severance packages will need shareholder approval.
Investors, led by the corporate governance campaigning funds at Amalgamated Bank, vented their anger at Mr Purcell's pay-off, which included a $44m lump sum to reflect lost stock options, plus an annual $250,000 and a secretary for the rest of his life. Mr Purcell's protégé, the co-president Stephen Crawford, left with a severance deal worth $32m.
Mr Purcell was forced out in June after a bitter public feud with former directors and investors. They were angry at the disappointing performance of the bank under his leadership, and nervous that it appeared to be haemorrhaging top staff.
He was replaced by Mr Mack, the man he had forced out as president four years earlier.
Mr Mack argued that the rebel plan - to force a shareholder vote on all severance packages worth more than three times annual salary and bonus - would be impractical and costly. It would also make it harder to lure Wall Street rainmakers to work for the bank, he said.
However, the motion was passed by 432 million shares to 347 million.
Rebels also won a vote to scrap the 75 per cent threshold for shareholder votes on major deals, including a takeover of the bank. A simple majority will be required in future, something that Mr Mack had said would hand too much control over the company's destiny to its biggest institutional shareholders.
Morgan Stanley said last night the votes were advisory and the board would consider them.Reuse content