7:42 p.m. | Updated
Morgan Stanley’s chairman, John J. Mack, will step down at the end of year, paving the way for the company’s chief executive, James P. Gorman, to take on that role as well.
The bank announced Mr. Mack’s retirement late Thursday morning shortly after its board met by telephone to vote on the transition.
Revolving Door
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Mr. Mack, a former chief executive of the company, has been chairman since early 2010. He is expected to retain a senior advisory role. He is working on a book about leaders and his years on Wall Street, which is scheduled to be published next September by Simon Shuster.
Mr. Mack, a graduate of Duke University, is expected to join other corporate boards. He already serves on the boards of a number of nonprofit organizations and is chairman of the panel of economic advisers for Jon M. Huntsman Jr., a Republican presidential candidate.
The decision to have Mr. Gorman succeed Mr. Mack as chairman was widely expected.
Mr. Mack, 66, is one of Wall Street’s best-known figures. He worked at Morgan Stanley for years, rising from bond salesman to become the company’s president. After a long-running dispute with Morgan Stanley’s then-chief executive, Philip J. Purcell, he left the company in 2001.
He soon resurfaced at Credit Suisse, which named him chief executive of the Credit Suisse First Boston investment bank, and later co-chief executive of the parent company, the Credit Suisse Group.
At Credit Suisse, he lived up to his nickname “Mack the Knife,” drastically eliminating jobs and cutting costs. But the relationship, in the end, was ill-fated. At one point he proposed merging Credit Suisse First Boston with another investment bank. The Swiss bank’s board disagreed, and his contract lapsed in 2004.
In 2005, after an uprising at Morgan Stanley forced Mr. Purcell to step down, the board asked Mr. Mack to return as chief executive. He received a standing ovation when he walked into the trading floor on his first day.
Yet his record as Morgan Stanley’s leader was mixed. He made riskier bets after returning to the firm, giving it some of its former swagger, but he was unable to pull back in time in 2007 and 2008 as the New York bank sustained significant losses.
During the financial crisis, Morgan Stanley required $10 billion in emergency support from the federal government, as well as a $9 billion investment by the Japanese bank Mitsubishi UFJ Financial Group to survive. Mr. Mack, however, received credit for negotiating the Mitsubishi deal, persuading the Japanese bank to move ahead with the partnership despite the difficult environment. Morgan Stanley repaid the government bailout money in 2009.
Mr. Gorman has been running the day-to-day operations of Morgan Stanley since 2010. He has been trying to revive the company’s fortunes, reducing risk and rebuilding units that were injured during the credit crisis.
He has received credit from analysts for his efforts, but Morgan Stanley’s stock, like that of other financial companies, continues to languish. Its shares closed Thursday at $16.59, up $1.11, but down from the $29.60 when Mr. Gorman became chief at the start of 2010. When Mr. Mack took the helm in 2005, Morgan Stanley’s shares were trading above $43.
Morgan Stanley’s move to combine the chief executive and chairman roles is likely to raise eyebrows among corporate governance watchdogs. They typically encourage companies to have a nonexecutive chairman, which they say gives the board a more independent voice.
Article source: http://feeds.nytimes.com/click.phdo?i=560267ce063b087d1d12abfbb638413c
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