On Wednesday, Morgan Stanley, one of the most prestigious banks on Wall Street, announced that Ted Pick, a veteran of the firm with thirty years of experience, has been chosen as its next chief executive. This decision concludes a public three-way race that began with James Gorman, who has been the chief executive since 2010 and humorously compared the process to the television series “Succession”.Thank you for reading this post, don't forget to subscribe!
Mr. Pick will assume his new role in January. The other contenders for the position, Andy Saperstein and Dan Simkowitz, will take on larger responsibilities as co-chairmen, overseeing Morgan Stanley’s wealth management and sales and trading businesses, among other areas.
Mr. Gorman, who is 65 years old, expressed his hope and expectation that Mr. Saperstein and Mr. Simkowitz will remain with the bank for a long time. The bank did not provide anyone for an interview.
“We were fortunate to have three highly talented internal candidates,” Mr. Gorman commented after the announcement. “Everyone told me that this would lead to a major internal conflict, but it did not. ” The bank took the unusual step of publicly identifying these internal candidates, which is a departure from the typically secretive hiring process of top positions in corporate America.
Mr. Pick, who is 54 years old, joined Morgan Stanley in 1990 and progressed through the ranks in its investment banking and trading businesses. Most recently, he served as co-chairman overseeing those divisions. In an interview, Mr. Pick revealed that he did not learn about his appointment as chief executive until around 4:30 pm on Wednesday, when the bank’s board of directors called him into a meeting and gave him a standing ovation.
Mr. Gorman is set to inherit a bank that is vastly different from the one he took over after the 2008 financial crisis. Morgan Stanley suffered huge losses from its significant investments in subprime loans during the mortgage meltdown. As a result, the bank, along with many others, had to seek external investors and a government bailout.
Even before the financial crisis, Morgan Stanley saw a great deal of corporate drama. In 2005, Philip J. Purcell succeeded John J. Mack, who had been a long-serving leader of the bank but left to take the top position at Credit Suisse. However, Purcell was later removed from the role of chief executive in a boardroom coup. Journalist Patricia Beard chronicled this power struggle in her book “Blue Bloods and Mutiny: The Fight for the Soul of Morgan Stanley”.
After only four years, Mr. Mack announced that he would step down as chief executive. During his tenure, the bank experienced both high profits and losses, resulting in a significant drop in its share price. Mr. Gorman was able to stabilize the bank by focusing on expanding its brokerage business, including the acquisition of the Smith Barney franchise in 2009, which caters to wealthy individuals. Subsequent large acquisitions in wealth management, like the $13 billion purchase of E-Trade in 2020, have further strengthened Morgan Stanley’s business and reduced its reliance on the more volatile banking and trading units.
The bank also serves elite clients, including Elon Musk. With a robust technology banking practice, Morgan Stanley played a pivotal role in Mr. Musk’s acquisition of Twitter, now known as X, last year. The bank was among those that provided Mr. Musk with the necessary funds to complete the deal, a decision that could result in losses considering the social media platform’s struggles.
In recent years, Morgan Stanley has maintained a lower profile compared to many of its peers, especially when compared to its downtown rival, Goldman Sachs. Goldman’s chief executive, David M. Solomon, is working to realign the business towards its traditional core activities after an ill-advised foray into consumer banking. There are also rumors circulating about how long he will remain in his position.
Morgan Stanley has recently faced significant backlash. Its latest quarterly earnings report showed a decline in investment banking revenue, slower growth in wealth management flows, and a nearly 10 percent drop in profit compared to the previous year.
The bank’s shares have decreased by 17 percent this year. Following the announcement of Mr. Pick’s appointment, the shares remained relatively unchanged during after-hours trading.
Both Mr. Gorman and Mr. Pick expressed no concern regarding the decline in the stock price. They stated that Mr. Pick’s selection should not be interpreted as a preference for any specific branch of the bank’s business.
“There will be a change in leadership, but no change in strategy,” said Mr. Pick.
Mr. Gorman added, “You pick a CEO based on his instincts.”
One thing that has changed, according to Mr. Pick, is his language. In 2017, The Wall Street Journal reported that his use of profanity had caught the attention of top executives at Morgan Stanley.
When asked about his current language practices, Mr. Pick stated that he now uses “the King’s English” and is “very fond of the entire dictionary.” He further remarked, “There are many words beyond four letters.”