Morgan Stanley’s chairman, John J. Mack, will step down at the end of year, paving the way for the firm’s chief executive, James P. Gorman, to take the role.
The bank’s board met by telephone on Thursday morning to vote on the decision, according to people familiar with the matter who were not authorized to speak on the record.
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Mr. Mack, a former chief executive of the firm, has been chairman since early 2010. He is expected to retain a senior advisory role, and is currently working on a book about leaders and his years on Wall Street, which is scheduled to be published next September.
It is expected that Mr. Mack, a graduate of Duke University, will join other corporate boards. He already sits on a number of not-for-profit boards and is chairman of the panel of economic advisers for the Republican presidential candidate Jon M. Huntsman Jr.
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 firm’s president. After a long-running dispute with Morgan Stanley’s chief executive, Philip Purcell, he left the firm in 2001.
He soon resurfaced at Credit Suisse, which named him chief executive of the Credit Suisse First Boston investment bank, and later co-C.E.O. of the parent company, the Credit Suisse Group.
At Credit Suisse he lived up to his nickname “Mack the Knife,” drastically reducing 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 the bank against Mr. Purcell, the Morgan Stanley 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 ramped up risk after returning to the firm, giving it some of its former swagger, but he was unable to pull it back in time in 2007 and 2008 as the New York bank sustained significant losses.
During the financial crisis, Morgan Stanley required billions of dollars in emergency support from the federal government as well as a big investment by the Japanese bank Mitsubishi UFJ Financial Group in order to survive. Mr. Mack, however, received credit for negotiating the Mitsubishi deal, convincing the Japanese bank to move ahead with the partnership despite the difficult environment.
Mr. Gorman has been running the day-to-day operations of Morgan Stanley since 2010. He has been working to turn around the firm’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 firms, continues to languish. It is currently trading just above $16 a share, down from $29.60 when Mr. Gorman took over. When Mr. Mack took the helm in 2005, Shares of Morgan Stanley were trading above $43.
Morgan Stanley’s move to combine the role of chief executive and chairman is likely to raise eyebrows among corporate governance watchdogs, who typically encourage companies to have a nonexecutive chairman, a move they feel gives the board a more independent voice against management. Wall Street is now split on this issue. Citigroup and Bank of America have split the roles, while Goldman Sachs and JPMorgan Chase — and soon Morgan Stanley — have combined it.
Article source: http://feeds.nytimes.com/click.phdo?i=560267ce063b087d1d12abfbb638413c
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