Morgan Stanley's former chairman and former president reiterated a call yesterday for the ouster of current CEO Philip Purcell, stating...
NEW YORK — Morgan Stanley’s former chairman and former president reiterated a call yesterday for the ouster of current CEO 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 Purcell’s departure. The group blamed Purcell for the company’s lagging stock price and financial performance.
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“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 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.
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, or 3.4 percent, to close at $53.61 yesterday. Shares have been trading in a range of $46.54 to $60.51 over the past 12 months.
The firm reported strong first-quarter growth, with profits up 20 percent. Investors, however, 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.
“The appointment of a new generation of leaders for our integrated securities businesses reaffirms our commitment to building long-lasting shareholder value,” he said.
The former executives, however, said the restructuring “was not responsive” to their concerns.