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Cheers echoed through Morgan Stanley when John J. Mack returned to save the soul of the bank, the bluest of Wall Streets blue-bloods, in the summer of 2005.
Four years on, Mr. Mack his bank and reputation smarting from the financial crisis is bequeathing Morgan Stanley to a relative newcomer: James P. Gorman, the quiet power behind a new push to lure ordinary investors to the banks blossoming brokerage business.
The appointment, announced on Thursday, ends months of speculation over who will succeed Mr. Mack as head of what was, until recently, one of the most prestigious and successful banks on Wall Street. Unanswered are the many questions still swirling over Mr. Macks legacy and, now, over Mr. Gorman, his handpicked successor.
Mr. Gorman, 51, will become chief executive on Jan. 1; Mr. Mack, 64, will remain chairman. The handoff is far smoother than the one that occurred when Mr. Mack returned in triumph after a shocking boardroom coup.
But the bitter, internal feud that opened the door for Mr. Mack was nothing compared to the turmoil that followed. Mr. Mack presided over an era of unprecedented profits and then record losses. Only a year ago, Morgan Stanley nearly foundered like Lehman Brothers. It was saved, like so much of Wall Street, by a multibillion-dollar bailout and other government aid.
Wall Street has rendered a harsh judgment on Mr. Macks stewardship. On his watch, Morgan Stanleys share price lost nearly a third of its value, while the stock of its archrival, Goldman Sachs, has gained. After skating so close to the edge, Mr. Mack retreated from the high-risk businesses that almost cost him his bank. To many, Morgan Stanley seemed to lose its old swagger.
To Morgan Stanley insiders, the diminished role for Mr. Mack, who spent all but a few years of his career at the bank, is not only a changing of the guard but the end of an era. He and Mr. Gorman will hold a town hall-style meeting at Morgan Stanleys Manhattan headquarters on Friday.
It will be emotional, said one senior executive.
Mr. Gorman will come to the job with a far different pedigree than Mr. Mack. A lanky, cerebral Australian-born executive who dislikes being called Jim, Mr. Gorman is currently co-president in charge of Morgan Stanleys global wealth management. He joined Morgan Stanley less than four years ago, from Merrill Lynch, where he ran the global private client business. Before that he was a senior partner at McKinsey & Company.
For much of the last year, Mr. Gorman and another executive, Walid A. Chammah, who runs the investment banking and capital markets operations, had been vying for the top job. Mr. Mack seemed to have favored Mr. Gorman, whom he had hired and promoted through the ranks.
Mr. Chammah, a flamboyant man with a penchant for smart suits and monogrammed shirts, also ruled himself out by insisting on staying in London, where he lives in South Kensington. He will become chairman of Morgan Stanley International.
After a dismal second quarter because of problems in Mr. Chammahs half of the bank, the scale tipped decisively in Mr. Gormans favor. While questions remained over Mr. Macks charismatic but sometimes unstructured management style, the board had been impressed by Mr. Gormans ability to switch quickly between jobs and learn fast, important in a vast conglomerate like Morgan, and especially appreciated his presentations to the board on the long-term future of the firm.
For Mr. Gorman, the good news came Monday evening, over dinner and drinks with Mr. Mack at Ilili, an upscale Lebanese restaurant in the Flatiron district in Manhattan (Mr. Mack is of Lebanese descent). After a 10 a.m. conference call on Thursday with board members, the deal was done. The vote for Mr. Gorman was unanimous.
In an interview on Thursday, Mr. Mack characterized the succession as orderly. He said the process of finding a successor had been under way for about 18 months when he first told the board he wanted to step down when his contract ended next year and before he turned 65. He will turn 65 in November. The bank hired a recruiter to draw up a list of outside candidates, but none of them were interviewed.
Still, Mr. Mack and other executives said he had faced resistance to his decision to step down, describing a conversation with S. Parker Gilbert, former chairman and a man who represents old school Morgan Stanley. He had been one of the so-called Group of Eight who had agitated to oust Mr. Macks predecessor, Philip J. Purcell, and brought Mr. Mack back to the firm.
I want you to stay longer, Mr. Parker said. I am confident you can enjoy the fruits of your work. But Mr. Mack answered: Parker, after getting through the financial crisis and the way this firm was pushed around financially and the fear of going under, he said he had decided he wanted to go.
Mr. Mack will most likely remain a force behind Mr. Gorman. The two men will still have offices next to each other. Mr. Gorman, for his part, said Mr. Macks legacy was secure. John came back and stabilized the company and brought back the pride, he said. He made the right calls at the right time in an incredibly stressful situation, he said.
While Mr. Gorman lacks Mr. Macks flash and is far less known in financial circles, people who know him said he was up to the job.
R. Glenn Hubbard, dean of Columbia Business School, who has known Mr. Gorman since his days at Merrill Lynch, said he was a strategic thinker and his qualities made him a good recipe for success. He described Mr. Gorman as a terrific pick. Mr. Gorman sits on the schools board.
Morgan Stanley Names James Gorman to Succeed John Mack - NYTimes.com
Four years on, Mr. Mack his bank and reputation smarting from the financial crisis is bequeathing Morgan Stanley to a relative newcomer: James P. Gorman, the quiet power behind a new push to lure ordinary investors to the banks blossoming brokerage business.
The appointment, announced on Thursday, ends months of speculation over who will succeed Mr. Mack as head of what was, until recently, one of the most prestigious and successful banks on Wall Street. Unanswered are the many questions still swirling over Mr. Macks legacy and, now, over Mr. Gorman, his handpicked successor.
Mr. Gorman, 51, will become chief executive on Jan. 1; Mr. Mack, 64, will remain chairman. The handoff is far smoother than the one that occurred when Mr. Mack returned in triumph after a shocking boardroom coup.
But the bitter, internal feud that opened the door for Mr. Mack was nothing compared to the turmoil that followed. Mr. Mack presided over an era of unprecedented profits and then record losses. Only a year ago, Morgan Stanley nearly foundered like Lehman Brothers. It was saved, like so much of Wall Street, by a multibillion-dollar bailout and other government aid.
Wall Street has rendered a harsh judgment on Mr. Macks stewardship. On his watch, Morgan Stanleys share price lost nearly a third of its value, while the stock of its archrival, Goldman Sachs, has gained. After skating so close to the edge, Mr. Mack retreated from the high-risk businesses that almost cost him his bank. To many, Morgan Stanley seemed to lose its old swagger.
To Morgan Stanley insiders, the diminished role for Mr. Mack, who spent all but a few years of his career at the bank, is not only a changing of the guard but the end of an era. He and Mr. Gorman will hold a town hall-style meeting at Morgan Stanleys Manhattan headquarters on Friday.
It will be emotional, said one senior executive.
Mr. Gorman will come to the job with a far different pedigree than Mr. Mack. A lanky, cerebral Australian-born executive who dislikes being called Jim, Mr. Gorman is currently co-president in charge of Morgan Stanleys global wealth management. He joined Morgan Stanley less than four years ago, from Merrill Lynch, where he ran the global private client business. Before that he was a senior partner at McKinsey & Company.
For much of the last year, Mr. Gorman and another executive, Walid A. Chammah, who runs the investment banking and capital markets operations, had been vying for the top job. Mr. Mack seemed to have favored Mr. Gorman, whom he had hired and promoted through the ranks.
Mr. Chammah, a flamboyant man with a penchant for smart suits and monogrammed shirts, also ruled himself out by insisting on staying in London, where he lives in South Kensington. He will become chairman of Morgan Stanley International.
After a dismal second quarter because of problems in Mr. Chammahs half of the bank, the scale tipped decisively in Mr. Gormans favor. While questions remained over Mr. Macks charismatic but sometimes unstructured management style, the board had been impressed by Mr. Gormans ability to switch quickly between jobs and learn fast, important in a vast conglomerate like Morgan, and especially appreciated his presentations to the board on the long-term future of the firm.
For Mr. Gorman, the good news came Monday evening, over dinner and drinks with Mr. Mack at Ilili, an upscale Lebanese restaurant in the Flatiron district in Manhattan (Mr. Mack is of Lebanese descent). After a 10 a.m. conference call on Thursday with board members, the deal was done. The vote for Mr. Gorman was unanimous.
In an interview on Thursday, Mr. Mack characterized the succession as orderly. He said the process of finding a successor had been under way for about 18 months when he first told the board he wanted to step down when his contract ended next year and before he turned 65. He will turn 65 in November. The bank hired a recruiter to draw up a list of outside candidates, but none of them were interviewed.
Still, Mr. Mack and other executives said he had faced resistance to his decision to step down, describing a conversation with S. Parker Gilbert, former chairman and a man who represents old school Morgan Stanley. He had been one of the so-called Group of Eight who had agitated to oust Mr. Macks predecessor, Philip J. Purcell, and brought Mr. Mack back to the firm.
I want you to stay longer, Mr. Parker said. I am confident you can enjoy the fruits of your work. But Mr. Mack answered: Parker, after getting through the financial crisis and the way this firm was pushed around financially and the fear of going under, he said he had decided he wanted to go.
Mr. Mack will most likely remain a force behind Mr. Gorman. The two men will still have offices next to each other. Mr. Gorman, for his part, said Mr. Macks legacy was secure. John came back and stabilized the company and brought back the pride, he said. He made the right calls at the right time in an incredibly stressful situation, he said.
While Mr. Gorman lacks Mr. Macks flash and is far less known in financial circles, people who know him said he was up to the job.
R. Glenn Hubbard, dean of Columbia Business School, who has known Mr. Gorman since his days at Merrill Lynch, said he was a strategic thinker and his qualities made him a good recipe for success. He described Mr. Gorman as a terrific pick. Mr. Gorman sits on the schools board.
Morgan Stanley Names James Gorman to Succeed John Mack - NYTimes.com
