Morgan Stanley Ex-Executives Urge the Ouster of CEO Purcell
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Eight former Morgan Stanley executives urged the board to oust Chief Executive Officer Philip Purcell, saying his “failure of leadership” has caused the firm’s shares to lag behind Wall Street rivals.
The group including the former president, Robert Scott, and the former chairman, Parker Gilbert, said Mr. Purcell’s decision yesterday to name Zoe Cruz and Stephen Crawford co-presidents failed to address concerns they outlined in a March 3 letter to the board. The former executives also said that Mr. Purcell forced out some of the firm’s top bankers, including the president, Stephan Newhouse.
“It is imperative that the board act promptly to change the leadership and governance of Morgan Stanley,” the group said in the letter.
The appointments threw the world’s second-biggest securities firm into turmoil, as managing directors learned that Mr. Newhouse, Vikram Pandit, who oversaw sales and trading and investment banking, and John Havens, head of equities, had left.
The pressure on Mr. Purcell, 61, intensified as Scott Sipprelle, a hedge fund manager who sparked the calls for change at Morgan Stanley with a December letter to the board, demanded his resignation.
“This has raised the ante and the focus, and would indicate the board will be leaning harder on senior management to get results,” said Charles Goodfellow, who helps manage $100 billion, including about 3.25 million Morgan Stanley shares, at Bank of New York.
Mr. Gilbert, in an interview, said Messrs. Newhouse, 58, and Pandit, 48, were “shown the door.” Joseph Fogg, a former managing director, said the executives were ousted after sharing views with board members on what Morgan Stanley should do.
“They gave assurances of confidentiality in return for candor and promised no recriminations,” Mr. Fogg said. “That clearly hasn’t happened.”
The group’s letter said that Mr. Purcell “will not be able to inspire and lead the firm back to its rightful position in the financial services industry “and said a successor should be identified “as soon as possible.” It was signed by Messrs. Gilbert, Scott, and Fogg, and Anson Beard, Lewis Bernard, Richard Debs, Frederick Whittemore, and John Wilson.
The former executives own a total of about 11 million shares of Morgan Stanley stock.
