Morgan Stanley, Lazard CEOs announce plans to step down

Yahoo Finance reporter David Hollerith discusses Morgan Stanley CEO James Gorman's announcement that he plans to step down as CEO within the next year and details what the succession plan might look like.

Video transcript

AKIKO FUJITA: Well, Morgan Stanley CEO James Gorman announcing today he plans to step down from his role leading the firm within the next year. Yahoo Finance's David Hollerith is following the story for us. And he joins us now. David, how do we look at this in the context of the other banks? James Gorman's been there for a long time. What does the succession plan look like?

DAVID HOLLERITH: Yeah, Akiko, so this has been talked about for a while now, and they mentioned-- Gorman mentioned on the call today that there are three planned potential CEO incumbents who are all internal employees. But Gorman, just as far as his legacy goes, he is really known for reshaping Morgan Stanley after the Great Financial Crisis into a more diversified bank, especially a wealth management powerhouse. He led the bank's acquisition for most of Smith and Barney, which was sold by, at the time, a cash strapped Citigroup in 2009. Since then, he's become CEO, and Morgan Stanley shares have gained about 180%, outpaced by the S&P 500, but that's far better than the banking sector's index.

So, more recently-- it's kind of interesting-- Morgan Stanley has shown a lot of strength as compared to the regional bank turmoil. They're well insulated from some of that. And as part of that, Morgan Stanley was a part of the rescue effort to First Republic Bank. And they contributed $2.5 billion to that effort. And while the rescue didn't change First Republic's fate, Gorman did say in April that Morgan Stanley was seen as part of the problems in 2008. And 14 years later, he was very gratified to have the bank be seen as part of the solution.

SEANA SMITH: Yeah, certainly, a number of changes under Gorman over the last decade plus here. Dave, this is not the only executive shakeup that we're seeing play out on Wall Street today. Another new chief executive at Lazard. What are we learning?

DAVID HOLLERITH: Yeah, this happened, actually, yesterday. Lazard CEO Ken Jacobs, he's also 64 years old, as Gorman is. And like Gorman, he started in late 2009. Gorman started in early 2010-- same period, though. And his succession is a little bit more solidified. Peter Orszag is said to become his successor, as Bloomberg has first reported, but the succession topic obviously kind of brings back the largest bank back into the spotlight, JPMorgan, which is going to have an investor day on Monday.

Jamie Dimon has reigned as CEO for years of the bank, and he's rebuked sort of discussions of him leaving anytime soon. But that being said, he started in 2005, and he's 67 years old. So investors are going to be keen to hear any more details in terms of what that looks like. That being said, he has agreed to stay on for at least five years, which was back in 2021. So he does have a few more years to go, at least by executive compensation.

AKIKO FUJITA: OK, we'll see if we get any hints during investor day next week. David Hollerith, as always, thanks so much for that.