JPMorgan Chase & Co. and Morgan Stanley's executivecompensation packages received endorsements from ISS Proxy ServicesUSA, the firm whose negative recommendation helped sink a similarplan at Citigroup Inc.

JPMorgan and Morgan Stanley displayed “reasonable alignment”between shareholder returns and pay for Jamie Dimon and JamesGorman, the firms' respective chief executive officers, ISSanalysts wrote in separate reports dated April 27. Glass Lewis& Co., another shareholder advisory firm, also endorsed the payplans for the New York-based banks, which will hold their meetingson May 15.

Citigroup Inc. shareholders rejected an executive pay planearlier this month, a first among the six largest U.S. banks, amidcriticism it lets CEO Vikram Pandit collect millions of dollars inrewards too easily from the No. 3-ranked U.S. lender. ISS had urgedinvestors to reject Citigroup's plan.

ISS said that while JPMorgan “continues to resist adoptingincentive plans with pre-established goals and long-termobjectives,” it added a feature “that provides both an incentivefor sustained performance and some mitigation against excessiverisk-taking.”

Glass Lewis and ISS also endorsed a shareholder proposal torequire an independent board chairman, which the bank opposes.Dimon holds the titles of chairman and CEO.

'Inability' to Monitor

Dimon, 56, was awarded $23 million in salary and bonuses for his2011 performance, the same as he received for 2010, JPMorgan saidin a regulatory filing this month. Gorman, 53, had his package cut25 percent to $10.5 million, Morgan Stanley said in a filing.

Mark Lake, a Morgan Stanley spokesman, declined to comment, asdid JPMorgan's Joe Evangelisti.

Glass Lewis told shareholders to vote against the election ofdirector Ellen Futter to JPMorgan's board. Futter, president of theMuseum of Natural History, previously served on the board ofAmerican International Group Inc., the insurer rescued by the U.S.government in a bailout that swelled to $182.3 billion.

Futter, who has served on JPMorgan's board since 1997, showed an“inability to effectively monitor credit risk during her tenure atAIG,” and JPMorgan's “investment activities do not appear to be anyless complex than those of AIG,” Glass-Lewis said in its report.JPMorgan has donated an undisclosed sum to the New York museumFutter runs, the proxy firm said. ISS recommended shareholderselect Futter.

Futter didn't immediately respond to e-mails sent through themuseum seeking comment on Glass Lewis's recommendation.

Easing Concerns

JPMorgan's stock dropped 22 percent last year and Morgan Stanleyfell 44 percent, compared with 18 percent for the Standard &Poor's 500 Financials Index.

While Morgan Stanley investors “remain concerned about thecompany's continued lagging returns, concerns may be mitigated bythe fact that 2012 incentive awards for the CEO, based on 2011performance, decreased by 45 percent due to the absence of a cashbonus payment and stock options,” ISS wrote.

ISS opposed Morgan Stanley's proposal to set aside 50 millionshares to cover future equity-compensation awards. ISS said theshares would bring the total available, along with outstandingoptions and unvested previous awards, above the proxy firm'sallowable cap. Glass Lewis recommended shareholders vote for theproposal.

Morgan Stanley responded to ISS's opposition in a regulatoryfiling today, saying the proxy adviser compared the firm with abroader range of companies than its direct competitors. It said arejection of the proposal would hinder the bank's ability to bothalign shareholder and employee interests and to comply withguidance from regulators on pay.

Glass Lewis recommend shareholders vote against Laura D. Tyson,a professor at University of California, Berkeley's Haas School ofBusiness, who has been an adviser to the Obama administration andhas served on Morgan Stanley's board since 1997. Tyson, as head ofthe bank's governance committee, should be held responsible for its“poor disclosure” regarding transactions with entities affiliatedwith directors, the proxy firm said. ISS didn't oppose anydirectors.

Morgan Stanley doesn't have any shareholder proposals up forvote.

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