Morgan Stanley CEO James Gorman plans to step down within the next year “in the absence of a major change in the external environment,” he told investors Friday at the bank’s annual shareholder meeting, according to Bloomberg.
The bank’s board has “identified three very strong senior internal candidates for consideration as the next CEO,” Gorman added, according to the Financial Times.
Gorman did not name the candidates, but they are presumed to be Ted Pick, who leads Morgan Stanley’s institutional securities unit; Andy Saperstein, who leads wealth management; and Dan Simkowitz, the bank’s investment-management chief.
Gorman named Pick and Saperstein as the bank’s co-presidents in 2021 and elevated Simkowitz to co-head of corporate strategy alongside Pick. A fourth potential successor to Gorman — the bank’s former chief operating officer, Jon Pruzan — left the bank in January.
Gorman will become Morgan Stanley’s executive chairman “for a period of time” after leaving the CEO role, he said Friday.
“This structure will ensure the continued stability of Morgan Stanley while at the same time positioning it for a decade of exciting growth under new leadership,” he said, according to Bloomberg.
The “specific timing of the CEO transition has not been determined, but it is the board’s and my expectation that it will occur at some point in the next 12 months,” Gorman added, according to the Financial Times.
Gorman has been Morgan Stanley’s CEO since 2010, when he replaced John Mack. Previously, as the bank’s wealth-management chief, Gorman served as an architect of Morgan Stanley’s acquisition of Smith Barney from Citi.
That move may have set the tone of expectations of what Morgan Stanley would become during his tenure. Gorman has been perhaps more acquisition-happy than his peers: His bank, in a single year, pulled off two of Wall Street’s largest banking acquisitions since the 2007-08 financial crisis — a $13 billion purchase of E*Trade and a $7 billion deal for fund manager Eaton Vance.
Additionally, the bank, under Gorman, has emphasized growing its wealth-management presence to offset riskier trading and dealmaking business. The bank’s wealth-management unit oversees roughly $4.5 trillion. Its revenue in 2022 outpaced that of Morgan Stanley’s investment bank, and accounted for 45% of the bank’s revenue during this year’s first quarter, according to The Wall Street Journal.
The bank’s market capitalization has tripled to about $140 billion during Gorman’s time as CEO, the Financial Times reported.
Gorman’s announcement Friday somehow tracks with his 2021 estimate that he would stay in Morgan Stanley’s top role for at least three more years, yet may seem an about-face from comments he made at last year’s shareholder meeting.
When an investor last May asked whether Gorman would retire soon, the CEO replied, “‘Soon’ is the operative word, and the answer to that is no … But retire we all must do eventually, or die in our seats, which I have no intention of doing.”
Gorman on Friday said he “remain[s] extraordinarily optimistic about the future of Morgan Stanley.”
“I’ve seen a lot of environments — some challenging, some not, some crisis, some not, some ebullience — and the world will certainly get through this period,” he said, according to Bloomberg.
Gorman’s first few years as CEO were marked by efforts to restore investor trust and resolve lingering issues that led the firm to near-collapse during the last financial crisis.
“As someone who lived through the darkest days of 2008 where Morgan Stanley was seen as part of the problem, it’s indeed rewarding to be here 14 years later as part of the solution,” he said last month, according to The Wall Street Journal.
The comment came after Morgan Stanley and 10 other leading U.S. banks infused then-endangered First Republic Bank with $30 billion. First Republic was later seized by regulators and sold to JPMorgan Chase.
