James Gorman said Friday that he intends to step down as Morgan Stanley‘s CEO within the year, sparking a succession race atop one of Wall Street’s dominant firms.
The bank’s board of directors has narrowed its CEO search to three “very strong” internal candidates, Gorman told shareholders at the New York-based company’s annual meeting.
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Gorman, 64, will assume the role of executive chairman “for a 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 expectation and my expectation that it will occur sometime 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 the takeover 2010, Gorman has delivered one of the more successful transformations on Wall Street. Through a series of smart acquisitions, Morgan Stanley bounced back from nearly capsizing during the 2008 financial crisis to become an asset management juggernaut.
The bank began that journey in 2009, when Morgan Stanley Smith bought Barney from Citi group in the throes of the financial crisis, with thousands of financial advisers. It then spent more than $20 billion to acquire discount broker E-Trade and investment manager Eaton Vance in 2020, adding scale and weight to the bank’s non-trading business.
As a result, Morgan Stanley has become an asset-accumulating machine: Gorman has said his bank can add about $1 trillion in assets every three years, eventually reaching $10 trillion.
“It’s hard to argue that James Gorman wasn’t one of the elite financial services CEOs who took over the company when he emerged from the 2008 financial crisis and greatly improved its returns,” KBW analyst David Konrad said in a statement. a research note. .
The company’s investors have rewarded it with one of the highest ratings among major banking peers. That’s because shareholders prefer the more stable income streams generated by wealth and wealth management over the more volatile fees from trading and advisory companies.
Morgan Stanley’s shares have tripled during Gorman’s tenure.
Morgan Stanley shares during the tenure of CEO James Gorman.
Morgan Stanley’s internal CEO candidates are the men who lead the bank’s three chief executives enterprisesaccording to knowledgeable people.
Ted Pick and Andy Saperstein, who lead the bank’s capital markets and asset management divisions respectively, have also served as co-presidents since 2021. Dan Simkowitz heads the bank’s smallest division, asset 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 said public in recent years he had no plans to remain CEO much longer, and on Friday he joked that he wouldn’t die holding onto the title.
Gorman has “no plans to go out like Logan Roy,” the fictional CEO of HBO’s “Succession” series told investors.