(Reuters) -Institutional Shareholder Services has urged investors to reject Morgan Stanley's ( MS ) proposal to expand its equity incentive compensation plan, as the proxy adviser escalates its pushback against Wall Street.

The investment bank had proposed adding 50 million common shares to its equity incentive plan and extending the program by three years. Such incentives align employee and shareholder interests while discouraging imprudent risk taking, it said.

However, ISS said Morgan Stanley ( MS ) had granted too many shares on average over the past three years. Some disclosures were also incomplete, it added.

Equity incentives are a common practice at banks, particularly for senior employees, and can account for a significant portion of total pay.

So far this proxy season, ISS has opposed a number of management proposals in the United States. It pushed back against retention bonuses for Goldman Sachs' top two executives and the compensation plans for BlackRock's top management.

Goldman shareholders approved the pay packages last week, while BlackRock's executive compensation will be put to a non-binding vote on May 15.

The proxy adviser, however, has recommended voting for executive pay at Morgan Stanley ( MS ). The bank declined to comment.

ISS and Glass Lewis, the two chief proxy advisers, have drawn multiple allegations of undue influence and lack of transparency.

On Tuesday, a Congressional subcommittee held a hearing entitled "Exposing the Proxy Advisory Cartel", where U.S. Representative Ann Wagner, a Missouri Republican, said the companies "routinely dictate" shareholder votes.

Separately, Lazard disclosed on Wednesday it had asked ISS to conduct a thorough review of its report, in which the proxy firm recommended a vote against the bank's executive compensation plan.

(Reporting by Niket Nishant in Bengaluru and Tatiana Bautzer in New York; Editing by Anil D'Silva)