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Morgan Stanley's John Mack Plans To Step Down as CEO
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On-Air Editor
Morgan Stanley Chief Executive John Mack is stepping down and will be replaced by James Gorman, one of the investment bank's co-presidents, CNBC has learned.
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AP Jack Mack |
Mack, 64 years old, will remain chairman of Morgan Stanley, whose management has drawn criticism from some quarters lately after a string of recent losses. These management changes will be taking effect January 1, 2010.
Mack told the board 18 months ago he wanted to step back from the CEO role when he turns 65 in November, Robert Kidder, lead director of Morgan Stanley, said in a statement. Mack has led Morgan Stanley for four years.
Morgan Stanley's shares [MS
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] have come roaring back this year after it fought for survival in the wake of the Lehman Brothers collapse, helped by the U.S. government and an investment from Japanese bank Mitsubishi UFJ that Mack took the lead in negotiating.
Still, the shares, which are up nearly 80 percent so far this year, have fallen short of a 107 percent surge in archrival Goldman Sachs [GS
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] stock.
Mack has come under some criticism for scaling back the company's risk profile even as rivals like Goldman Sachs have regained momentum as the crisis has ebbed.
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James Gorman |
Gorman, 51, who runs Morgan Stanley's brokerage and has been overseeing its expansion through a joint venture with Citigroup's [C
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] Smith Barney unit, has long been seen as a front runner for the top job at Morgan Stanley.
"Gorman has really earned his stripes," said Anton Schutz, president of Mendon Capital Advisors in Rochester, New York, which owns Morgan Stanley shares. "He did a great job at Merrill, he's doing a good job at Morgan Stanley, and the timing for a change seems to be good, because we've made it through the worst of the crisis."
Morgan Stanley earlier this year paid $2.75 billion to acquire a controlling stake in Citi's Smith Barney retail brokerage, a move that could provide a more stable source of revenue to offset some of the investment bank's more volatile businesses.
Prior to joining Morgan Stanley in 2006, Gorman had held a series of positions at Merrill Lynch, including leading its global private client business from 2001 to 2005.
Walid Chammah, another Morgan Stanley co-president who had also for a time been a candidate for the top job, was named chairman of Morgan Stanley International.
While Mack was popular with many within Morgan Stanley, many investors had grown restless with his management, which saw the bank embrace risk in the months preceding the credit crisis that shook Wall Street last year.
More recently, the bank was lambasted by some on Wall Street for retreating from risk after the worst of the crisis blew over. At the same time, rivals like Goldman and JPMorgan Chase [JPM
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] seized trading opportunities.
"Mack made some missteps, but he did remove silos at Morgan Stanley and make it one company, and he hired Gorman, which was huge," Schutz said. "There were some missteps, but he didn't end up going the route of Bear or Lehman, either."
—Reuters and AP contributed to this story.
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