John Mack will step down as chairman and leave the board of Morgan Stanley at the end of 2011, the firm announced today. James Gorman, the current president and CEO, will become chairman effective January 1, 2012.
Mack, 66, will become a senior advisor to the firm at that time and step down from a day-to-day role. It had been expected that Gorman, 52, would take over as chairman.
"I made clear back in 2009 that I would serve in the Chairman role for two years and then move on," Mack said in a statement. "Now that time has come."
Mack will also serve as senior advisor to Republican presidential candidate Jon Huntsman and write a book.
Mack began his career as a bond salesman at Morgan Stanley in 1972 and became head of the worldwide taxable fixed income division from 1985 to 1992. He ascended to the board of directors in 1987 and became president of the firm in 1993. After Morgan Stanley merged with Dean Witter in 1997, he served as president and chief operating officer until he left in 2001, when Dean Witter chairman Philip Purcell became CEO at the firm.
Mack then went on to become CEO at Credit Suisse First Boston in 2001. He returned in 2005 to Morgan Stanley to oust Purcell and become chairman and CEO. Under Mack's stewardship as chairman and CEO, the firm had record profits in 2006 but suffered losses of billions in 2007, due to trades tied to subprime mortgages. He guided the firm through the financial crisis, negotiating a deal with Japanese bank Mitsubishi to receive an investment and also with the federal government to receive billions in support.
Gorman took over as CEO from Mack on January 1, 2010. He joined Morgan Stanley in February 2006 as the president and COO of the global wealth management group. He was co-president of Morgan Stanley from 2007 to 2009.
Prior to joining Morgan Stanley, he worked at Merrill Lynch for seven years in various positions, including head of corporate acquisitions strategy and research, president of the global private client business and chief marketing officer. Before Merrill Lynch, he was a senior partner in financial services at consulting firm McKinsey & Co. He had previously worked as an attorney in Australia.
When Gorman took over as CEO, stock was trading at $29.60. It's currently trading at just above $16. When Mack came back to the firm in 2005, shares were trading above $43.
Gorman follows Goldman Sachs's Lloyd Blankfein and JPMorgan's Jamie Dimon in occupying both the chairman and CEO role.