James Gorman will serve as the company’s new chairman and chief executive starting in early 2012, increasing his power and influence at the global financial services firm.
Mack had also held the chairman and CEO titles in 2005 after Phil Purcell, the company’s former chairman and chief executive, made a move to step down. Having the same individual serving in both roles seems to be a tradition at the Wall Street behemoth.
But what does combining these two high-powered jobs mean for Morgan Stanley’s future? Some argue that things have gone reasonably well for the company over the years; others reckon Morgan Stanley is tempting fate.
A recent article in Forbes notes that scandal-ridden companies such as News Corp, Deere, Enron, Total and Tyco have one thing in common: they all combine the roles of chairman and CEO. In the wake of the corporate scandals at these companies, the call for a split between the chairman and CEO positions is gaining momentum.
‘For the first time in modern corporate history, the clear trend in the US is to split the roles [of chairman and CEO],’ says Dr Stephen Davis, executive director of Yale University School of Management’s Millstein centre for Corporate Governance. ‘Separation adds a large measure of accountability because it makes clear that the CEO will be assessed.’
Driving transparency has become a very important part of shaping corporate culture and the best way to start is by separating the roles of these executives so each can be evaluated based on the execution of their fiduciary duties. In light of this, companies like Citigroup, Bank of America, Depository Trust & Clearing Corporation and BlackBerry maker Research In Motion have all tweaked their governance models to allow for the separation of the roles.
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