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 On Tuesday, Morgan Stanley announced that Chief Financial Officer
Ruth Porat, 57, would be leaving at the end of April to head back to
Silicon Valley where she has professional and personal roots, to
become CFO of Google Inc.
Porat's departure did not surprise other executives inside the bank,
who pointed to her age - a year older than Gorman - and the belief
that he may not leave for five more years.
Soon after Gorman took over in 2010, there were at least four
contenders for his seat: Porat, Colm Kelleher and Paul Taubman, who
jointly ran investment banking and trading, and Greg Fleming, whom
Gorman brought in to run asset management, later adding wealth
management to his responsibilities.
Two of those, Porat and Taubman, are gone or soon to be gone. The
other two, Fleming, 52, and Kelleher, 57, may be too old to be CEO
when Gorman retires, management experts and Morgan Stanley insiders
said. Fleming has been approached for other CEO spots, and may tire
of waiting to head up Morgan Stanley.
"You just can't anticipate that people who are high potential and
seasoned are going to wait, so it is critical to have at least two
generations of candidates that are being developed," said Jane
Stevenson, who runs the CEO succession practice for executive search
firm Korn Ferry.
Kelleher and Fleming are involved with long-term succession planning
within their respective businesses, and aware that neither may be
the next CEO of Morgan Stanley, a person familiar with the matter
said. They still play important roles because if the unexpected
happens - if Gorman becomes ill or gets injured or cannot continue
in his role for some reason - either would be qualified to take his
place immediately.
One main player in the organization is Ted Pick, the 46-year-old
global head of equities and research, whose business has blossomed
and made up for lost revenue from a declining focus on fixed-income
trading. Sources inside Morgan Stanley widely expect him to move
into bigger roles.
Gorman has also made several moves to beef up the ranks of possible
successors, people familiar with the matter said.
On Tuesday, Gorman named Porat's replacement: Jonathan Pruzan, 46,
an investment banker who co-heads Morgan Stanley's financial
institutions group.
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The bank also announced executive changes last week. It added
investment banking and trading executive Clare Woodman to the
operating committee and marketing executive Mandell Crawley, 39, and
investor relations head Kathleen McCabe, 42, to its management
committee.
Morgan Stanley also shuffled three executives - Andy Saperstein, 48,
Raj Dhanda, 47, and Mohit Assomull, 41 - into new roles across
wealth management and institutional securities.
Eric Heaton, who runs the private bank and is working to build
Morgan Stanley's loan book, and Celeste Brown, 38, the bank's newly
appointed treasurer and former head of investor relations, are also
viewed as relatively young heavy hitters in the organization. Ages
for Woodman and Heaton were not public but bank sources estimated
that they are in their 40s.
Executives named in this story either declined to comment or did not
immediately respond to requests for comment.
Gorman himself became CEO in the aftermath of the financial crisis,
a time when the bank was making a huge strategic shift to focus less
on risky trading activities and more on the wealth management
business where Gorman spent much of his Wall Street career.
Some insiders had believed Gorman might formally appoint either
Fleming or Kelleher as his No. 2, by naming one as president for
example. But sources at the bank now say that is unlikely to happen
because such a move would signal to other executives that they do
not have a chance at the CEO job any time soon.
(Additional reporting by David Henry; Editing by Grant McCool)
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