SC 13D/A 1 dsc13da.txt AMENDMENT NO. 24 TO SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 24) Morgan Stanley Group Inc. ------------------------- (Name of Issuer) Common Stock, $1.00 par value ------------------------------ (Title of Class of Securities) 617446 10 9 ------------- (CUSIP Number) Jonathan M. Clark, Esq. General Counsel and Secretary Morgan Stanley Group Inc. 1585 Broadway New York, NY 10036 (212) 761-4000 -------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 2, 1996 ------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1 (b) (3) or (4), check the following box: [ ] Check the following box if a fee is being paid with this statement: [ ] -------------- SCHEDULE 13D -------------- -------------------- CUSIP NO. 617446109 -------------------- ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. or I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON Richard B. Fisher ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [X] (b) [_] ------------------------------------------------------------------------------ SEC USE ONLY 3 ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 00 ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF less than 1% SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 59,258,392 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 2-3% PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 59,260,876 ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 35.4 ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON 14 IN ------------------------------------------------------------------------------ 2 -------------- SCHEDULE 13D -------------- -------------------- CUSIP NO. 617446109 -------------------- ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. or I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON John J. Mack ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [X] (b) [_] ------------------------------------------------------------------------------ SEC USE ONLY 3 ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 00 ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF less than 1% SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 59,258,392 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 1-2% PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 59,260,876 ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 35.4 ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON 14 IN ------------------------------------------------------------------------------ 3 -------------- SCHEDULE 13D -------------- -------------------- CUSIP NO. 617446109 -------------------- ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. or I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON Barton M. Biggs ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [X] (b) [_] ------------------------------------------------------------------------------ SEC USE ONLY 3 ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 00 ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF less than 1% SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 OWNED BY 59,258,392 ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 1-2% PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 59,260,838 ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 35.4 ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON 14 IN ------------------------------------------------------------------------------ 4 -------------- SCHEDULE 13D -------------- -------------------- CUSIP NO. 617446109 -------------------- ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S. or I.R.S. IDENTIFICATION NUMBER OF ABOVE PERSON Each of the persons described on Appendix A. ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [X] (b) [_] (Applies to each person listed on Appendix A) ------------------------------------------------------------------------------ SEC USE ONLY 3 ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 00 (Applies to each person listed on Appendix A) ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] 5 (Applies to each person listed on Appendix A) ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 As stated on Appendix A ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF less than 1% (Applies to each person listed on Appendix A) SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 59,258,392 (Applies to each person OWNED BY listed on Appendix A) ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING less than 1% (Applies to each person listed on Appendix A) PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 As stated on Appendix A. ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 (Applies to each person listed on Appendix A) [_] ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 As stated on Appendix ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON 14 IN (Applies to each person listed on Appendix A) ------------------------------------------------------------------------------ 5

29 ITEM 1. SECURITY AND ISSUER. This statement relates to the Common Stock, par value $1.00 per share (the "Shares"), of Morgan Stanley Group Inc., a Delaware corporation (the "Company"). The address of the principal executive office of the Company is 1585 Broadway, New York, New York 10036. The Share information contained in this Amendment No. 24 has been adjusted to reflect a 2-for-1 common stock split effected in the form of a 100% stock dividend that was paid on January 26, 1996 to holders of record on January 16, 1996. ITEM 2. IDENTITY AND BACKGROUND. (a)-(c), (f) The cover sheets to this statement and Appendix A hereto contain the names of the persons (the "Reporting Persons") who beneficially own Shares that are subject to the voting and any disposition restrictions set forth in (1) the employee Stockholders' Agreement and/or any of the Plan Agreements or (2) the MAS Agreements, all as described in Item 6, to which such persons are party to and on whose behalf this filing is made. The cover sheets to this statement and Appendix A provide the name, citizenship and aggregate amount beneficially held by each Reporting Person. The business address of each of the Reporting Persons is 1585 Broadway, New York, NY 10036. (d)-(e) No Reporting Person during the last five years has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. The Shares held by the Reporting Persons are beneficially owned pursuant to one or more of the following: (1) Pursuant to the recapitalization (the "Recapitalization") effective February 14, 1986 in which holders of the Company's then outstanding privately-held common stock and non-cumulative preferred stock received Shares, and holders of the Company's outstanding $8 cumulative senior preferred stock received shares of $8 Cumulative Convertible Preferred Stock, stated value $100 per share (the "Convertible Preferred Shares"), all of which were subsequently converted into Shares (the Shares beneficially owned pursuant to such Recapitalization (including through the conversion of the Convertible Preferred Shares) being referred to herein as "Recapitalization Shares"); (2) Pursuant to participation in the Company's 1986 Stock Option Plan (the "Option Plan"), the Company's Performance Unit Plan (the "PUP Plan"), the Company's 1988 Equity Incentive Compensation Plan (the "Equity Incentive Plan") and/or the Morgan Stanley U.K. Group Profit Sharing Scheme (the "U.K. Profit Sharing 30 Scheme") and/or similar employee benefit plans or arrangements (the Option Plan, the PUP Plan and the Equity Incentive Plan are referred to collectively as the "Plans", and the Shares beneficially owned pursuant to participation in such Plans and the U.K. Profit Sharing Scheme being referred to herein as "Benefit Plan Shares"); (3) Pursuant to the acquisition of Shares as part of the purchase price paid to certain of the Reporting Persons (the "Former MAS General Partners") in respect of the sale on January 3, 1996 of their general partnership interests in Miller Anderson & Sherrerd, LLP, a Pennsylvania registered limited liability partnership ("MAS"), to Morgan Stanley Asset Management Holdings Inc., an indirect wholly owned subsidiary of the Company ("MSAMHI") (such Shares being referred to herein as the "MAS Shares"); and (4) Pursuant to privately negotiated or open market transactions (the Shares beneficially owned pursuant to such transactions being referred to herein as "Separately Acquired Shares"). In addition, many of the Reporting Persons are participants in the Morgan Stanley Group Inc. and Subsidiaries Employee Stock Ownership Plan (the "ESOP"), under which they have been allocated shares of the Company's ESOP Convertible Preferred Stock (the "ESOP Stock"). Shares of ESOP Stock are convertible into Shares, and shares of ESOP Stock are entitled to vote on all matters submitted to a vote of the holders of Shares, voting together with the holders of Shares as one class, all as described more fully below. Each Reporting Person's Recapitalization Shares, if any, were acquired in exchange for such Person's shares of the Company's privately-held common stock and non-cumulative preferred stock and/or as a result of the conversion of the Convertible Preferred Shares; each Reporting Person's Benefit Plan Shares and shares of ESOP Stock, if any, were acquired pursuant to the terms of the Plans, the U.K. Profit Sharing Scheme and the ESOP in consideration of services rendered and, in the case of Shares to be acquired pursuant to an exercise of options granted under a Plan will be acquired by payment of the exercise price of the option; each MAS General Partner's MAS Shares were acquired as part of the purchase price paid in connection with the sale of their general partnership interests in MAS as described above; and for each Reporting Person's Separately Acquired Shares, if any, were acquired by payment of personal funds or as a gift. ITEM 4. PURPOSE OF TRANSACTION. RECAPITALIZATION SHARES The Recapitalization was effected as of February 14, 1986, and the Recapitalization Shares were acquired in order to facilitate an initial public offering of the Shares. Prior to the Recapitalization, the then Managing Directors and Principals of Morgan Stanley & Co. Incorporated, a subsidiary of the Company, owned all of the Company's common stock. After the Recapitalization and the initial public offering of the Shares, such Managing Directors and Principals (as a group) owned approximately 79% of the Company's Shares, the voting and disposition of which were subject to the Stockholders' Agreement (defined below in Item 6). The voting and disposition restrictions currently applicable to the Recapitalization Shares are discussed 31 in Item 6. BENEFIT PLAN SHARES Subsequent to May 2, 1991 up to an aggregate of 48,000,000 Shares may be issued pursuant to the Plans. Each of the Plans is administered by the Compensation Committee of the Board of Directors (the "Compensation Committee"), which selects the particular eligible persons who will receive awards under the Plans and determines the size and terms of such awards. The Compensation Committee consists of at least three disinterested persons. OPTION PLAN The purpose of the Option Plan is to provide an incentive to certain Managing Directors, Principals, officers, key employees and consultants of the Company and its subsidiaries ("Certain Personnel") to remain in the employ of the Company and such subsidiaries and to increase their interest in the success of the Company by offering them an opportunity to obtain a proprietary interest in the Company through the grant of options to purchase Shares. The Option Plan provides for the issuance of incentive stock options ("Incentive Stock Options") which meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), options that are not qualified under the Code ("Nonqualified Options" and collectively with the Incentive Stock Options, the "SOP Options") and stock appreciation rights. To date only Nonqualified Options have been granted under the Option Plan. The exercise price of a SOP Option may not be less than 100% of the fair market value of the Shares subject to the SOP Option as of the grant date, as determined by the Compensation Committee. A SOP Option becomes exercisable at a rate of one-third of the number of Shares covered by such SOP Option grant after each of the first three anniversaries of the date of grant, unless the Compensation Committee otherwise provides. All SOP Options, other than Incentive Stock Options, are required to expire within 10 years and one day of the date of grant. The individual option agreement entered into by any Reporting Person pursuant to the Option Plan (an "Option Agreement") contains restrictions on voting and disposition of any Shares acquired pursuant to the Option Plan that are similar to the restrictions applicable to the Recapitalization Shares (as discussed in Item 6). The Option Plan will terminate upon the earlier of (i) the adoption of a resolution of the Board of Directors authorizing its termination and (ii) March 21, 1996. PUP PLAN The purpose of the PUP Plan is to benefit and advance the interests of the Company and its subsidiaries by rewarding Certain Personnel for their contributions to the financial success of the Company and thereby motivate them to continue to make such contributions in the future by awarding performance units (the "Performance Units") whose value is determined by reference to earnings per share of the Shares over a stated period of time. 32 The value of a Performance Unit is equal to the Company's consolidated earnings per share (as determined by the Compensation Committee in accordance with the terms of the PUP Plan) during the period commencing on the first date of the Company's fiscal quarter which includes the date as of which a Performance Unit is awarded (the "Base Date") and ending on the earlier of (i) the last day of the Company's fiscal year which includes the date on which such Performance Unit is awarded and (ii) the last day of the Company's fiscal quarter in which a participant's employment is terminated by reason of death, long-term disability or retirement, or to such other date as is determined by the Compensation Committee (the "Valuation Date"). After the value of Performance Units is determined, such value generally will be distributed to the recipient in equal installments on or as soon as practicable following each of the first and second anniversaries of the Valuation Date. The PUP Plan provides that 50% of each installment of such value is paid in Shares, and the balance is paid in cash, although the Compensation Committee may increase the percentage paid in cash or in Shares. The individual PUP Plan agreement entered into by a Reporting Person pursuant to the PUP Plan (a "PUP Agreement") contains restrictions on voting and disposition of any shares acquired that are similar to the restrictions applicable to the Recapitalization Shares (as discussed in Item 6). The PUP Plan will terminate upon the earlier of (i) the adoption of a resolution of the Board of Directors terminating such Plan and (ii) March 21, 1996. EQUITY INCENTIVE PLAN The purpose of the Equity Incentive Plan is to attract, retain and motivate Certain Personnel, to compensate them for their contributions to the growth and profits of the Company and to encourage ownership by them of Shares. Awards under the Equity Incentive Plan may be in the form of Shares ("Restricted Shares"), stock units ("Stock Units") and/or options to purchase Shares ("EIP Options"). Shares issued pursuant to the Equity Incentive Plan may, in the discretion of the Compensation Committee, be made subject to the same voting restrictions that are set forth in the Stockholders' Agreement and in the Option Agreement and PUP Agreement (as discussed in Item 6). Under the terms of the Equity Incentive Plan, the Compensation Committee may grant Restricted Shares, valued at a discount (not to exceed 50%) of fair market value as of the date of grant (a "Stock Award"), in lieu of, or in addition to, all or a portion of a participant's cash incentive compensation for a particular year. A participant may be allowed to elect to receive a portion of this award in the form of EIP Options (an "Option Award") or to receive additional Shares or options in lieu of some or all of the cash portion of his compensation. Awards may also be made in the form of Stock Units representing the number of Shares a participant would otherwise have been eligible to receive under a Stock Award (a "Stock Unit Award"). A participant may also elect to receive Stock Units in lieu of some or all of the cash portion of his compensation. An Option Award entitles the participant to acquire a specified number of Shares at an exercise price of no less than 50% of fair market value on the date of the award, as determined by the Compensation Committee. EIP Options vest and become exercisable in accordance with a schedule established by the Compensation Committee. The exercise price may be paid in cash or Shares or a combination thereof. The ability to pay the EIP Option exercise price in Shares would, unless prohibited by the Compensation Committee, enable an optionee to engage in a series of 33 successive stock-for-stock exercises of EIP Options and thereby fully exercise EIP Options with little or no cash investment by the optionee. Option Awards expire not later than ten years from the date of award. The Equity Incentive Plan will terminate upon the earlier of (i) the adoption of a resolution of the Board of Directors and (ii) May 4, 1999. U.K. PROFIT SHARING SCHEME Shares purchased on behalf of certain Reporting Persons pursuant to the U.K. Profit Sharing Scheme are purchased with profit-sharing awards and are held pursuant to the terms of the U.K. Profit Sharing Scheme for investment purposes. Such Shares are not subject to the restrictions on voting and disposition contained in the Stockholders' Agreement (as defined in Item 6). MAS SHARES The acquisition of MAS by MSAMHI (together with two of its affiliates) was effected on January 3, 1996, and the MAS Shares were acquired by the Former MAS General Partners as part of the purchase price paid in connection with the sale of their general partnership interests in MAS. The voting and disposition of the MAS Shares are subject to the MAS Agreements (as defined below in Item 6). The voting and disposition and other restrictions currently applicable to the MAS Shares are discussed in Item 6. SEPARATELY ACQUIRED SHARES Separately Acquired Shares are held by Reporting Persons for investment purposes. Such Shares are not subject to the restrictions on voting and disposition contained in the Stockholders' Agreement or the Plan Agreements (as defined in Item 6). ESOP STOCK Shares of ESOP Stock are allocated to each participant in the ESOP on December 31 in each year. Each share of ESOP Stock is convertible into Shares by the trustee of the ESOP at any time prior to the date fixed for redemption of the ESOP Stock at an initial conversion rate of one share of ESOP Stock to two Shares, which rate is subject to adjustment. On the date hereof the conversion price per share at which such two Shares will be issued upon conversion of any shares of ESOP Stock is $35.88 (subject to adjustment). The ESOP Stock is redeemable at the Company's option at $35.88 per share (subject to adjustment) plus accrued dividends at any time after September 19, 2000 and prior thereto under certain circumstances at specified prices. The Company may pay the redemption price of the ESOP Stock in cash, in Shares or a combination thereof. Neither ESOP Stock nor Shares issued to participants in the ESOP are subject to the restrictions on voting and disposition contained in the Stockholders' Agreement or the Plan Agreements. * * * Except for (i) the possible acquisition from time to time of additional Separately Acquired 34 Shares for investment purposes and (ii) the acquisition of Shares issued by the Company in the ordinary course of business pursuant to the Plans and the U.K. Profit Sharing Scheme, none of the Reporting Persons has any plans or proposals which relate to or would result in their acquisition of additional Shares. Subject to the restrictions described in Item 6, dispositions of Shares by Reporting Persons may be made from time to time pursuant to (i) Rule 144 under the Securities Act of 1933, as amended (the "Act"), (ii) a registration statement filed under the Act or (iii) any available exemption from registration under the Act, and in accordance with the individual investment objectives of the Reporting Person disposing of such Shares. Except as previously described in this Item 4, the Reporting Persons as a group do not have any plans or proposals that relate to or would result in any of the matters described in subparagraphs (a)-(j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) Items (11) and (13) of the cover page for each of the Reporting Persons are hereby incorporated by reference. As of the date of this report, the Reporting Persons as a group may be deemed to beneficially own an aggregate of 59,258,392 Shares, or approximately 35.4%, which represents a .70% increase from the amount reported in Amendment No. 23. Since Amendment No. 23, the Company granted awards under the Equity Incentive Plan (principally in connection with fiscal 1995 awards which commenced vesting on January 2, 1996) and issued Shares in respect of awards previously granted to Japanese local employees; the Reporting Persons' beneficial ownership of Shares, after accounting solely for such grants and issuances and changes in the number of total shares outstanding, increased by approximately 1.6%. On January 3, 1996, the acquisition of MAS by MSAMHI (together with two of its affiliates) was effected and the MAS Shares were acquired by the Former MAS General Partners as part of the purchase price paid in connection with the sale of their general partnership interests in MAS; the Reporting Persons' beneficial ownership of Shares, after accounting solely for the acquisitions of the MAS Shares and changes in the number of total shares outstanding, increased by approximately 1%. In addition, since Amendment No. 23, the retirement or termination of certain employees became effective with the result that they are no longer Reporting Persons, certain Reporting Persons' disposed of Shares and the voting restrictions relating to Shares that were issued to certain retired or terminated employees upon the conversion of Stock Units previously awarded under the Equity Incentive Plan lapsed; the Reporting Persons' beneficial ownership of Shares, after accounting solely for such retired or terminated employees, dispositions and conversions and changes in the number of total Shares outstanding, decreased by approximately 1.9%. The Reporting Persons as a group hereby disclaim beneficial ownership of any Shares held by any Reporting Person as to which such Reporting Person has sole voting and dispositive power. Each Reporting Person hereby disclaims beneficial ownership of any Shares which may be deemed to be beneficially owned by other Reporting Persons as members of a group. Except as described in Schedule I, no Reporting Person has the right to acquire Shares within 60 days from the date hereof. (b) Items (7) - (10) of the cover page or the information provided on Appendix A for each of the Reporting Persons are hereby incorporated by reference. 35 (c) Except as described in Schedule II, no Reporting Person has effected any transactions in any Shares during the past 60 days. (d) None. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Reporting Persons who own Recapitalization Shares have entered into a Stockholders' Agreement dated as of February 14, 1986 (the "Stockholders' Agreement") (Exhibit A hereto) which contains restrictions regarding the voting and disposition of the Recapitalization Shares. Pursuant to the terms of the Plans, the Compensation Committee has required that certain participants in such Plans enter into agreements that place restrictions on the voting and disposition of Shares acquired pursuant to such Plans similar to those restrictions set forth in the Stockholders' Agreement. Reference is hereby made to the terms of the agreements or certificates that impose such restrictions pursuant to the Plans (collectively, the "Plan Agreements"), the forms of which are included as Exhibits E, F, H, I, and J. Reporting Persons who own MAS Shares have entered into a Purchase Agreement dated as of June 29, 1995, as amended (the "MAS Purchase Agreement"), the relevant provisions of which relating to transfer and other restrictions with respect to the MAS Shares are described under "MAS Shares" below, and have executed (or agreed to become subject to) voting agreements (the "MAS Voting Agreements" (substantially in the form of Exhibit L hereto) and collectively with the MAS Purchase Agreement, the "MAS Agreements"), that place restrictions on voting and disposition of the MAS Shares that are substantially similar to restrictions contained in the Plan Agreements. The following descriptions are qualified in their entirety by reference to the Stockholders' Agreement, the Plan Agreements and the MAS Voting Agreements. VOTING RESTRICTIONS AND ARRANGEMENTS Each of the individuals listed on the cover pages to this report and Appendix A hereto is a party to one or more of the Stockholders' Agreement and the Plan Agreements and, in the case of the Former MAS General Partners, the MAS Agreements. Pursuant to the voting restrictions contained in the Stockholders' Agreement, the Plan Agreements and the MAS Voting Agreements, the Reporting Persons, prior to any vote of the stockholders of the Company at a meeting called with respect to any corporate action or before action is taken by written consent, may vote all Shares subject to the voting restrictions in a preliminary vote in such manner as each Reporting Person may determine in his sole discretion (the "Preliminary Vote"). At the subsequent stockholders' meeting or in connection with any action taken by written consent, the Reporting Persons must then vote all such Shares on the matter at issue in accordance with the vote of the majority of the Shares present and voting in the Preliminary Vote. Reporting Persons who cease to be employed by the Company or any of its subsidiaries on or prior to the date of the Preliminary Vote do not participate in the Preliminary Vote. Recipients of Stock Awards are entitled to exercise voting rights with respect to the Shares underlying such awards upon receipt of such awards. On March 6, 1991 the Company established a 36 trust (the "Trust") pursuant to the Trust Agreement between the Company and State Street Bank and Trust Company, as Trustee (the "Trustee"), dated March 5, 1991 (the "Trust Agreement") (Exhibit K) pursuant to which the Shares that correspond to Stock Unit Awards are placed in the Trust pending vesting and conversion. Subject to the Company's right to amend or terminate the Trust at any time, the terms of the Trust Agreement permit the active employees of the Company who are holders of Stock Units (other than Certain Personnel in certain non-U.S. jurisdictions as described below) to direct the vote of the Shares held in the Trust for purposes of the Preliminary Vote. In accordance with the terms of the Voting Agreement between the Trustee and the Company dated March 5, 1991 (Exhibit L), the Trustee has the obligation to vote the Shares held in the Trust in accordance with the result of the Preliminary Vote. Holders of ESOP Stock are entitled to vote on all matters submitted to a vote of the holders of Shares, voting together with the holders of Shares as one class. Each share of ESOP Stock is entitled to the number of votes equal to 1.35 times the number of Shares into which such share of ESOP Stock could be converted on the record date for such vote. Each Reporting Person who is a participant in the ESOP has the ability to instruct the trustee of the ESOP how to vote the shares of ESOP Stock allocated to his account. In addition, unallocated shares of ESOP Stock are voted by the trustee on a pro rata basis with the instructions received with respect to the allocated ESOP Stock. RESTRICTIONS ON DISPOSITION AND OTHER ARRANGEMENTS The Stockholders' Agreement presently permits each Reporting Person that is a party thereto to dispose of Recapitalization Shares and/or Shares acquired pursuant to the Option Plan and PUP Plan (together with the Recapitalization Shares, "Total Restricted Stock") in the following amounts: % of Total Restricted Stock Age at Date of Sale Permitted to be Sold__ ------------------- --------------------------- 35 through 38 10% 39 through 42 Additional 10% 43 through 46 Additional 10% 47 through 49 Additional 10% 50 and above Additional 10% If a Reporting Person ceases to be an employee of the Company or any of its subsidiaries, the Stockholders' Agreement permits such Reporting Person to dispose of his Recapitalization Shares without restriction. Reporting Persons may dispose of their Total Restricted Stock Shares at any time, in any amount regardless of the foregoing restrictions, with the consent of the Board of Directors of the Company. For information on disposition and other restrictions applicable to the MAS Shares, see "MAS Shares" below. OPTION PLAN The transfer restrictions contained in the Option Agreements permit the transfer, at any 37 time, without restriction, of only that number of Shares having a value equal to the excess of the fair market value (as of the date of exercise) of the Shares acquired upon exercise over the aggregate amount paid upon exercise multiplied by the highest statutory federal, state, local and foreign tax rates at the time of exercise (but in no event greater than 50% of such excess). The balance of the Shares acquired upon the exercise of such SOP Options will be transferable only in accordance with a schedule, substantially similar to that contained in the Stockholders' Agreement, that permits the transfer of a number of such Shares representing a specified percentage of the total number of Shares held by the optionee that are subject to restrictions and according to the optionee's age. If a Reporting Person ceases to be an employee of the Company or any of its subsidiaries, these transfer restrictions will no longer apply to Shares acquired pursuant to the Option Plan. The Compensation Committee has adopted certain additional and/or different terms and conditions for the grant of options ("U.K. Options"), including SOP Options, to Certain Personnel under the jurisdiction of the United Kingdom. Any Shares issued, or issuable, upon exercise of U.K. Options, however, are not subject to voting or disposition restrictions. PUP PLAN Pursuant to the PUP Agreements, Performance Units that have been awarded through the date hereof provide that Shares received thereunder will be transferable only in accordance with a schedule, substantially similar to that contained in the Stockholders' Agreement, that permits the transfer of a number of such Shares representing a specified percentage of the total number of Shares held by the recipient that are subject to restrictions and according to the recipient's age. If a Reporting Person ceases to be an employee of the Company or any of its subsidiaries, these transfer restrictions will no longer apply to the Shares acquired pursuant to the PUP Plan. Shares issued to Certain Personnel under the jurisdiction of the United Kingdom, however, are not subject to voting or disposition restrictions. EQUITY INCENTIVE PLAN A participant will vest in any Stock Awards, Stock Unit Awards or Option Awards, the restrictions on the transferability of Restricted Shares will lapse, any EIP Options awarded will become exercisable and Stock Units will convert into Shares all in accordance with a schedule established by the Compensation Committee. The Compensation Committee may, however, accelerate the vesting of any award, the lapse of restrictions on the transferability of any Restricted Shares, the date on which any EIP Option awarded first becomes exercisable and the date on which Stock Units convert into Shares. Prior to vesting and the lapse of restrictions on transferability, none of the awards under the Equity Incentive Plan may be sold, assigned, exchanged or transferred, pledged, hypothecated or otherwise disposed of or encumbered. Certain awards under the Equity Incentive Plan, whether vested or unvested, are also subject to forfeiture in circumstances specified by the Compensation Committee. Recipients of Stock Awards are entitled to receive dividends with respect to Shares underlying such awards upon receipt of such awards. Recipients of Stock Unit Awards are entitled to receive dividend equivalent amounts prior to receipt of Shares. The Company may require a participant to pay a sum to the Company or, pursuant to reduced Share delivery provisions, the Company may retain the number of Shares having an 38 equivalent value as may be necessary to cover any taxes or charges imposed with respect to property or income received by a participant pursuant to the Equity Incentive Plan. In addition, upon conversion of Stock Units into Shares or exercise of EIP Options, the Company may withhold a number of Shares sufficient to satisfy any obligation a participant owes to the Company resulting from any payment made on the participant's behalf under the tax equalization program for expatriate employees. From time to time the Compensation Committee has adopted certain additional and/or different terms and conditions for the grant of Stock Awards and Stock Unit Awards to Certain Personnel in certain non-U.S. jurisdictions (including to Japanese local employees or expatriates working in Japan) to permit such persons to qualify for favorable tax treatment under, or otherwise to comply with, the laws of such non-U.S. jurisdictions. In such cases the Company may not issue Shares corresponding to Stock Units and recipients may not have the ability to vote or the underlying Shares may not be subject to the restrictions on voting described under "Voting Restrictions and Arrangements" above. The Compensation Committee also has adopted certain additional and/or different terms and conditions for the grant of Option Awards (including U.K. Options) to Certain Personnel in certain non-U.S. jurisdictions in order to permit such persons to qualify for favorable tax treatment under the laws of such non-U.S. jurisdictions. U.K. PROFIT SHARING SCHEME The U.K. Profit Sharing Scheme provides that Shares awarded to the participants are held by a trustee in the name and on behalf of each participant for a period of two years from the date of such award (the "Retention Period"). Each participant is fully vested in, and is the beneficial owner of, the shares held on his behalf as of the award date of the Shares. During the Retention Period, a participant may not assign, pledge or otherwise dispose of such Shares; however, a participant is able to instruct the trustee how to vote such Shares on his behalf. MAS SHARES The MAS Shares are subject to the following transfer and other restrictions under the MAS Purchase Agreement. The MAS Shares issued to each Former MAS General Partner generally vest in accordance with the following vesting schedule: (i) one-sixth of such shares vested on January 3, 1996 (the "MAS Closing Date"); and (ii) one-sixth of such shares shall vest on each of the next five succeeding anniversaries of the MAS Closing Date (each date referred to in this clause (ii), a "Vesting Date"); provided, that no shares registered in the name of any Former MAS General Partner shall vest on any Vesting Date unless such Former MAS General Partner is actively employed by Morgan Stanley Asset Management Inc. ("MSAM") on such Vesting Date pursuant to an employment agreement with MSAM, unless such failure to be so employed is (a) as a result of such Former MAS General Partner's death or disability, or (b) as a result of the termination of such Former MAS General Partner's employment by MSAM without "Cause" or by the Former MAS General Partner for "Good Reason," as such terms are defined in such employment agreement. Notwithstanding the 39 foregoing, in the case described in clause (b) of the foregoing proviso, the continued vesting of shares as aforesaid shall be subject to the Former MAS General Partner's continued compliance with the noncompetition, nonsolicitation and confidentiality provisions of his or her employment agreement with MSAM for a period of one year from the date of termination of employment, or if shorter, for a period from the date of termination of employment to December 1, 2000. If the Former MAS General Partner does not comply continuously with the provisions for such period, any remaining unvested shares shall be forfeited as of the date of the first failure to so comply. Any shares so vested shall thereafter be free of any such vesting requirements, and any shares which are so forfeited shall be returned to the Company. Prior to vesting, all MAS Shares shall be nontransferable. Sales of vested MAS Shares by a Former MAS General Partner will also be subject to the Company's internal rules and policies applicable from time to time with respect to shares of common stock held by officers of the Company or its affiliates. In accordance with the MAS Voting Agreements, so long as a MAS General Partner is an employee of the Company or any of its subsidiaries, such MAS General Partner will be subject to the voting restrictions and procedures described in the first paragraph under "Voting Restrictions and Arrangements" above in this Item 6. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Certain of the following exhibits, as indicated parenthetically, were previously filed as exhibits to registration statements or reports filed by the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, respectively, or reports filed by the Reporting Persons under the Securities Exchange Act of 1934 and are hereby incorporated by reference to such statements or reports. Exhibit A Stockholders' Agreement dated February 14, 1986 among certain Reporting Persons and the Company (Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit B Morgan Stanley Group Inc. Performance Unit Plan, as amended and restated to date (Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit C Morgan Stanley Group Inc. 1986 Stock Option Plan, as amended and restated to date (Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit D Trust Deed and Rules of the Morgan Stanley International Profit Sharing Scheme (approved under the Finance Act 1978 as amended), dated 12 November, 1987, of Morgan Stanley Group Inc., Morgan Stanley International and Noble Lowndes Settlement Trustees Limited (Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit E Form of Award Agreement Under the Morgan Stanley Group Inc. Performance Unit Plan (Registration Statement on Form S-8 (No. 33- 42464)). Exhibit F Form of Nonqualified Stock Option Agreement Under the Morgan Stanley Group Inc. 1986 Stock Option Plan (Registration Statement on Form S-8 (No. 33-42464)). 40 Exhibit G Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan, as amended and restated to date (Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit H Form of Stock Unit Certificate Under the Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan (Previously filed as Exhibit V with Amendment No. 5 to Schedule 13D dated December 31, 1990). Exhibit I Form of Stock Option Certificate Under the Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan (Previously filed as Exhibit W with Amendment No. 5 to Schedule 13D dated December 31, 1990). Exhibit J Form of Voting Agreement Under the Morgan Stanley Group Inc. 1988 Equity Incentive Compensation Plan (Previously filed as Exhibit X with Amendment No. 5 to Schedule 13D dated December 31, 1990). Exhibit K Trust Agreement between Morgan Stanley Group Inc. and State Street Bank and Trust Company dated March 5, 1991 (Annual Report on Form 10-K for the fiscal year ended January 31, 1993). Exhibit L Voting Agreement among Morgan Stanley Group Inc., State Street Bank and Trust Company and Other Persons Signing Similar Agreements dated March 5, 1991 (Annual Report on Form 10-K for the fiscal year ended January 31, 1993). 41 Schedule I RIGHTS TO ACQUIRE SHARES As of April 23, 1996 (60 days from February 23, 1996), 1,088 Reporting Persons have the right to acquire 11,706,262 Shares pursuant to the exercise of options. No Reporting Person individually has options presently exercisable covering more than 1% of the Shares outstanding as of the date hereof. 42 Schedule II RECENT TRANSACTIONS* During the last 60 days, 107 Reporting Persons sold an aggregate of 821,516 shares at average prices ranging from $40.50 to $42.125 per Share, and/or effected a transfer by gift of an aggregate of 67,338 Shares. Such sales were effected pursuant to exemptions under the Securities Act of 1933, as amended. During such period, no Reporting Person individually disposed of a number of Shares exceeding 1% of the Shares outstanding. During such period, no Reporting Person individually acquired Shares in excess of 1% of the Shares outstanding. - --------------------- * The share information contained herein has been adjusted to reflect a 2-for-1 common stock split effected in the form of a 100% stock dividend that was paid on January 26, 1996 to holders of record on January 16, 1996. 43 Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: February 23, 1996 By: /s/ Ralph L. Pellecchio ----------------------- Ralph L. Pellecchio Attorney-in-Fact 44

MORGAN STANLEY GROUP INC /DE/ SC 13D/A