Wall Street is preparing for Morgan Stanley’s CEO’s departure. James Gorman announced on Friday that he intends to step down as chief executive officer of Morgan Stanley within the next 12 months, kicking off a battle for the top spot at one of the most influential companies on Wall Street.
At the New York-based company’s annual meeting, Gorman informed shareholders that the bank’s board had limited its search for a new chief executive officer to three “strong” internal candidates.
Gorman, who is 64 years old, has stated that after he steps down as CEO, he will “for some time” take on the role of executive chairman.
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“The specific timing of the CEO transition has not yet been determined,” Gorman stated. “However, the board of directors and I anticipate it will occur sometime in the next 12 months.”
“That is the current expectation in the absence of a major change in the external environment,” he continued. “That is the current expectation in the absence of a major change in the external environment.”
Since becoming CEO in 2010, Gorman has orchestrated one of Wall Street’s most effective transitions, resulting in increased success for the company. After coming perilously close to failing during the financial crisis of 2008, Morgan Stanley turned itself around and became a powerhouse in wealth management through a series of astute acquisitions.
In 2009, the bank started down this path when Morgan Stanley purchased Smith Barney from Citigroup amid the financial crisis. With the acquisition of Smith Barney, the bank gained hundreds of financial advisors. After that, in 2020, it shelled out more than $20 billion to acquire discount brokerage E-Trade and investment manager Eaton Vance, which added scale and heft to the bank’s operations unrelated to trading.
As a consequence of this, Morgan Stanley has evolved into an asset-gathering machine. Gorman has stated that his bank can add approximately one trillion dollars in assets every three years and eventually reach ten trillion dollars.
“It is impossible to dispute that James Gorman has not been one of the elite CEOs in the financial services business,” KBW analyst David Konrad wrote in a research note. “Taking over the company coming out of the” 2008 financial crisis and dramatically boosting its returns,”
The company’s shareholders have awarded it with a valuation that ranks among the highest for big bank competitors. This is because shareholders prefer the more stable revenue streams created by wealth management and asset management over the more volatile fees earned by trading and consulting firms.
During Gorman’s term as CEO, the share price of Morgan Stanley increased by a factor of three. According to those familiar with the situation, the internal candidates for the position of chief executive officer at Morgan Stanley are the men who are now running the bank’s three primary businesses.
Since 2021, Ted Pick and Andy Saperstein, in charge of the bank’s capital markets and wealth management divisions, have also been co-presidents. In 2021, Dan Simkowitz was promoted to co-head of strategy in addition to his current role as head of the bank’s investment management division.
Gorman’s intention to delegate his responsibilities to another executive has been made public with this announcement. Gorman has made it public knowledge over the past few years that he does not intend to continue serving as CEO for much longer, and on Friday, he joked that he would not pass away while carrying the title of CEO.
Gorman told investors that there are “no plans to go out like Logan Roy,” the fictitious CEO from the HBO series “Succession.”
