James Gorman said Friday he plans to resign as Morgan Stanley‘s CEO within the year, setting off a succession race atop one of Wall Street’s dominant firms.
The bank’s board has narrowed its CEO search to three “very strong” internal candidates, Gorman told shareholders at the New York-based firm’s annual meeting.
related investing news
Gorman, 64, will take on the executive chairman role “for a period of time” after stepping down as CEO, he said.
“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 said.
“That is the current expectation in the absence of a major change in the external environment,” he added.
Since taking over in 2010, Gorman has pulled off one of the more successful transformations on Wall Street. Through a series of savvy acquisitions, Morgan Stanley rebounded after nearly capsizing during the 2008 financial crisis to become a wealth management juggernaut.
The bank began that journey in 2009, when Morgan Stanley purchased Smith Barney from Citigroup in the throes of the financial crisis, gaining thousands of financial advisors. It then spent more than $20 billion to acquire discount brokerage E-Trade and investment manager Eaton Vance in 2020, adding scale and heft to the bank’s nontrading operations.
As a result, Morgan Stanley has become an asset-gathering machine: Gorman has said his bank can add roughly $1 trillion in assets every three years, eventually getting to $10 trillion.
“It is hard to argue that James Gorman has not been one of the elite CEOs in the financial services industry, taking over the company coming out of the” 2008 financial crisis and sharply improving its returns, KBW analyst David Konrad said in a research note.
The firm’s investors have rewarded it with one of the top valuations among big bank peers. That’s because shareholders favor the steadier revenue streams generated by wealth and asset management over the more volatile fees from trading and advisory businesses.
Shares of Morgan Stanley have tripled during Gorman’s tenure.
Morgan Stanley shares during CEO James Gorman’s tenure.
Morgan Stanley’s internal CEO candidates are the men leading the bank’s three main businesses, according to people with knowledge of the situation.
Ted Pick and Andy Saperstein, who run the bank’s capital markets and wealth management divisions respectively, have also been co-presidents since 2021. Dan Simkowitz runs the bank’s smallest division, investment management, and was named co-head of strategy in 2021.
The announcement makes official Gorman’s desire to hand over the reins to another executive. Gorman has said publicly for the past few years that he didn’t plan on staying much longer as CEO, and on Friday he joked that he wouldn’t die while holding the title.
Gorman has “no plans to go out like Logan Roy,” the fictional CEO from HBO’s “Succession” series, he told investors.