Morgan Stanley Again Pressured to Oust CEO
Morgan Stanley’s former chairman and former president reiterated Tuesday their call for the ouster of current top executive Philip Purcell, stating that a management shake-up announced earlier in the day was not in the best interests of the company.
Purcell said he was replacing President Stephan Newhouse with two co-presidents, Morgan Stanley veterans Stephen Crawford and Zoe Cruz. The move, according to a Morgan Stanley statement, would provide new oversight of the company’s institutional securities and investment management operations.
However, a group of former executives and major shareholders, led by former Chairman Parker Gilbert and former President Robert Scott, said the restructuring could result in the loss of other executives.
The group also released a letter, dated March 3, sent to the current Morgan Stanley board calling for the departure of Chairman and Chief Executive Purcell. The group blamed him for the company’s lagging stock price and financial performance.
“We believe that the overriding cause of the firm’s poor performance is a failure of leadership by Philip Purcell as the firm’s CEO,” the March 3 letter said.
A spokesman for New York-based Morgan Stanley did not immediately return a call seeking comment on the shareholders’ statement. A spokesman for the group of shareholders and former executives also did not return a call seeking comment.
Later on Tuesday, Morgan Stanley said in a statement that Vikram S. Pandit, president and chief operating officer of its institutional securities group, and John P. Havens, head of the institutional equity division, were leaving the company, effective immediately, “to pursue other endeavors.”
Shares of Morgan Stanley, which had risen shortly after the new co-presidents were named, tumbled in afternoon trading once the former executives’ statement and previous letter were released. They fell $1.87 to $53.61 on the New York Stock Exchange.
The firm reported strong first-quarter growth March 17, with profit up 20%. Investors, however, have failed to push the shares higher, amid concerns that the company was too focused on fixed-income earnings and commodities.
In the statement announcing the management changes, Purcell said Crawford and Cruz would have responsibility for institutional securities as well as individual investor and investment management groups.
He emphasized that the goal was improving performance.
“By combining our institutional, individual and investment management businesses under Steve and Zoe’s leadership, we are continuing the great investment banking traditions of Morgan Stanley,” Purcell said in a statement.