NEW YORK, March 24 (Reuters) - Morgan Stanley bid adieu to another senior executive who was thought to be on a list of potential successors to Chief Executive Officer James Gorman, but a new generation of CEO candidates is rising inside the bank.
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. (link: reut.rs/113jq8v)
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.
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)