Fleming, the head of Morgan Stanley's wealth and asset management
businesses, is on the bank board's list of candidates who could
potentially succeed Chief Executive James Gorman, according to
sources with direct knowledge of the situation.
But colleagues and recruiters say he is also a flight risk for
He is an external candidate for top jobs at companies including
BlackRock Inc and American Express Co as part of their boards'
regular succession planning.
Fleming also has a friendly rapport with Lloyd Blankfein, chief
executive of archrival Goldman Sachs Group Inc, although that bank
has never gone outside its own ranks to pick a chief executive
officer. Some people close to Fleming say the he could even run a
company outside of financial services.
It is unclear if a suitable CEO job will be available any time soon.
Sources familiar with the thinking of Morgan Stanley's board said
directors believe there is time to work on a succession plan.
Gorman, 55, has been in the job for only four years, and directors
have no desire to replace him at this time.
A Morgan Stanley spokesman said Fleming has no plans to leave the
Wall Street bank. Fleming feels that his work at Morgan Stanley is
not finished, and he is in no hurry to become a chief executive, the
The other institutions with which he has been linked did not offer
any comment. Blankfein could not be reached for comment.
Still, Wall Street circles are abuzz with talk that the 50-year-old
executive, known for an ambitious streak, may be itching for a
bigger challenge soon, according to interviews with dozens of Morgan
Stanley insiders and other industry executives who know Fleming.
"Every couple of years, he finishes what he set out to do, and
people want to give him more," Navtej S. Nandra, a trusted Fleming
ally who is now president of online broker E*TRADE Financial Corp.
"Of course, that starts a whole slew of questions about what he's
going to do next, and where."
It could create a knotty predicament for Morgan Stanley's board and
Gorman. Directors like what Fleming is doing with the business and
want to keep him at the firm, but they do not have an obvious spot
to promote him within the bank.
People who know Fleming say he is at a crossroads as he enters his
fifth year at the bank. He has steered Morgan Stanley Wealth
Management through a complicated merger with Citigroup Inc's Smith
Barney brokerage, lifting the division's profit margins into a
targeted range after a bumpy start.
The business now generates more than half of Morgan Stanley's
revenue. It is the centerpiece of Morgan Stanley and helped its
shares rise nearly 65 percent last year.
As he has set the wealth business on course, Fleming has also come
to wield greater influence at Morgan Stanley. For example, he argued
for the bank to scale down its bond-trading risk more aggressively.
Colm Kelleher, who heads institutional securities, decided that was
the right approach.
"I have very high regard for his leadership and his achievement,"
said Masaaki Tanaka, one of two directors who represent Morgan
Stanley's biggest shareholder Mitsubishi UFJ Financial Group Inc on
Tanaka said Fleming had done very well in turning around the wealth
business but declined to comment specifically on succession
People who have worked with Fleming say he sets the bar high and can
be demanding. Subordinates recalled him honing in on the one detail
that was missing from a 30-page presentation and emailing round the
clock to get updates on projects.
Yet they also say he rarely loses his temper. Colleagues who worked
with Fleming during the mortgage crisis said they never heard him
raise his voice, even during tense negotiations.
Friends and adversaries alike describe Fleming using terms like "Boy
Scout" and "goodie two-shoes." One former colleague said Fleming
tries to head home by 9:30 p.m., even on nights he is entertaining
clients or hosting events. His only brush with the law appears to be
a June 2009 speeding ticket.
Morgan Stanley's board may eventually promote Fleming to president
of the whole bank, effectively anointing him Gorman's successor,
some sources said.
But Gorman, who is also chairman, has no plans to recommend such a
move in the near term. Promoting Fleming could discourage other
senior managers, the sources said.
Neither the board nor Fleming want to upset his relationship with
Kelleher or Chief Financial Officer Ruth Porat. Both are also on the
board's succession list and work well with Fleming in the current
power structure, the sources added.
Fleming's next move may come down to who offers him a job he wants
One close friend and former colleague said Fleming always had his
eyes on being a chief executive officer.
"And, by the way, I'm not saying that negatively," said the person.
"His ambition in life was not to be a star dealmaker or banker. His
ambition in life was to become CEO of a large organization."
Still, after a quick ascent up Wall Street's corporate ladder, it
has been a relatively long wait for Fleming to get to the corner
Fleming joined Merrill Lynch in 1992 from the consulting firm Booz
Allen, where he covered financial clients. By 1999, when he was only
35, he had become the head of the investment bank's U.S. financial
He aggressively courted CEOs at acquisitive banks like First Union
and Bank of America Corp who embarked on dozens of mergers in a
consolidation streak from the mid-'90s into the 2000s.
In 2001, he appeared on the Crain's New York Business list of high
achievers under 40. "I have a lot of confidence," he told the
magazine. "It's not arrogance; it's confidence."
Two years later, Fleming had received two more big promotions at
Merrill, first to head up investment banking globally and then to be
co-president of the entire capital markets unit.
He increased the investment bank's revenue by 2-1/2 times while
running it and personally advised on several landmark deals of the
era, including Blackrock's 1999 initial public offering and First
Union's $15 billion sale to Wachovia in 2001.
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"One of the things which clearly stands out about Greg is that he's
able to master virtually all the different aspects of a modern
financial institution," said Sullivan & Cromwell's H. Rodgin Cohen,
the pre-eminent bank lawyer who worked with Fleming on several deals.
Fleming got his first shot at the top job at a major company soon
after Merrill Lynch Chief Executive Stan O'Neal promoted him to
co-president of the firm in May 2007.
As the financial crisis took hold in the ensuing months, Merrill
began disclosing escalating losses from subprime mortgage
derivatives that grew to a crushing $45 billion. O'Neal and other
executives responsible for the losses were fired.
The board effectively made Fleming interim chief executive, but his
role was short-lived. It hired John Thain, a former Goldman Sachs
executive, to fill the job permanently.
Directors decided against Fleming because they felt investors wanted
someone who was not associated with the business that generated the
losses, a source said.
Though Fleming was in charge of the entire unit, the board did not
see him as directly responsible for the trading losses. Fleming was
routinely shut out of management decisions regarding trading, and
his unsolicited advice was ignored by superiors.
"While Greg would say he was without fault, the board didn't think
the outside world would view it that way," the person said. "The
world would've said, 'You're going to put the guy in the job that
was responsible for this?'"
After helping to negotiate the sale of Merrill Lynch to Bank of
America at the height of the crisis, Fleming left Wall Street.
He went to teach at Yale Law School, his alma mater, where he has
given ethics lessons about cases such as Goldman Sachs'
controversial "Abacus" derivatives deal and JPMorgan Chase & Co's
"London Whale" fiasco.
A person involved with Fleming's hiring at Morgan Stanley said it
was not easy to persuade him to return to Wall Street so soon after
the crisis. However, unlike many bankers, he was not greedy about
pay, this person added.
Fleming made as much as $34 million in his best year at Merrill
Lynch but earned less than that in his first three years at Morgan
When Fleming arrived in 2010, Morgan Stanley was shifting from being
one of Wall Street's premiere investment banks with a retail
brokerage unit tacked on, to having wealth management at the center
of its profit universe. It was buying Smith Barney in phases and
merging it with its own brokerage.
The plan to integrate the two businesses was engineered before
Fleming arrived, and by most accounts it was going terribly.
Clients' historical account information was not being transferred
properly, and staff complained about all sorts of technology
When Fleming embarked on a cross-country tour of brokerage offices
in early 2012, he got an earful from angry employees.
"Greg was basically going on a listening tour and got hit in the
face with it," says Mary Deatherage, a broker based in New Jersey.
He was resilient. Brokers recall him personally fielding complaints
ranging from slow email and lack of client birthday reminders to
bigger issues like a glitch with portfolio management systems that
required a "SWAT team" to resolve.
"He did that for two or three years with that kind of a focus until
an awful lot of the issues were subsiding," said Jim Hansberger, a
veteran adviser in Atlanta.
In early 2013, Fleming announced a plan to invest $500 million in
upgrading the unit's technology and hired former Merrill colleague
Chris Randazzo to oversee technology.
"Greg immediately understood what I was talking about and wanted to
get into very detailed discussions around where we are today and
where do we need to be in 12 months and 24 months and 36 months and
48 months," Randazzo said. "You don't see that very much from very,
very senior executives."
The wealth unit reached its 20 percent pre-tax profit margin goal
last year. Management has since raised the goal to a range of 22 to
25 percent by next year if interest rates stay low and markets
remain static. If rates rise and markets improve, the margin could
be higher, executives say.
Fleming is trying to boost revenue further by expanding the asset
management business and by lending more, an area where Morgan
Stanley lags rivals like Merrill Lynch that are part of big
Some of Fleming's associates said that gives him enough to do at
Morgan Stanley to bridle his ambition for some time.
Meanwhile, he is enjoying spending more time with his wife, Melissa,
and their three children. He still teaches a class at Yale, and even
found time last year to train for the New York City marathon,
completing it in under 3.5 hours.
"There's an expression that the strongest horse gets the cart.
That's Greg, right?" said E*TRADE's Nandra, whom Fleming had hired
at both Merrill Lynch and Morgan Stanley. "I can't wait to see him
as CEO some place one day, because I know that's who he is."
(Editing by Dan Wilchins, Paritosh Bansal and Cynthia Osterman)
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