Wall Street Promotion Logjam Endures With Fleming Latest to Exitby
U.S. bank managers worry about rising higher as CEOs stay put
`Stability is great, but the younger generation is blocked'
Morgan Stanley is demonstrating how rising to the top of a big U.S. bank is getting even harder, as chief executive officers stay on after guiding their firms through the aftermath of the financial crisis.
Greg Fleming, one of Morgan Stanley’s most senior leaders, announced Wednesday he’s stepping down. That came after CEO James Gorman indicated he plans to stay on at least five more years and installed an older deputy in the firm’s No. 2 position, according to people with knowledge of the matter.
The situation is likely to feed the growing unease on Wall Street described by recruiters in recent months: Managers see a logjam ahead of them, blocking promotions they think they deserve. And it reaches to the top. CEOs at five of the six biggest U.S. banks already have held their posts at least six years and haven’t publicly signaled any intent to leave soon.
“These guys are very control-oriented and they want to work as long as they can,” Michael Karp, head of recruitment firm Options Group Inc., said after the changes at Morgan Stanley became public. “Stability is great, but the younger generation is blocked from moving up and running these institutions. It’s a huge hindrance.”
Gorman, 57, recently told lieutenants about his decision to stay for five to seven more years, which was longer than what he had previously indicated, according to a person familiar with the situation. That and his decision to promote Colm Kelleher, 58, to president prompted Fleming to decide it wasn’t worth sticking around, the people said. He could’ve remained in his current role atop Morgan Stanley’s brokerage with Kelleher as his superior, the people said.
When a CEO decides to keep going, would-be successors may leave to run their own companies. JPMorgan Chase & Co. CEO Jamie Dimon, who’s repeatedly said he wants to stay another five years, has overseen a stream of departures of potential successors. They include former co-Chief Operating Officer Frank Bisignano, who left in 2013 to run First Data Corp., and Mike Cavanagh, who stepped down in 2014 to join Carlyle Group LP before becoming finance chief at Comcast Corp.
Under Dimon, JPMorgan has outperformed the broader Standard & Poor’s 500 Financials Index.
The situation in the U.S. contrasts with Europe, where the region’s biggest banks have undergone an unprecedented wave of management changes. Firms including Deutsche Bank AG, Credit Suisse Group AG and Standard Chartered Plc installed new leaders at the top last year. Barclays Plc picked Jes Staley, who had spent more than three decades at JPMorgan and had once been viewed there as a potential future CEO.
Such changes may spell opportunity for more U.S. executives willing to move.
“Greg Fleming is a capable manager who might be able to land a CEO job somewhere else,” said Mike Mayo, an analyst at CLSA Ltd. “You’ve had musical chairs at Barclays, Standard Chartered, Credit Suisse, so this increases the chance he can pursue a CEO job at another firm.”
Even illness hasn’t prompted U.S. bank CEOs to quit. Dimon was diagnosed with throat cancer in 2014, while Goldman Sachs Group Inc. CEO Lloyd Blankfein said last year that he has a “highly curable” form of lymphoma. Dimon remained active in his role, and told employees of the New York-based bank in December 2014 that he was free of the disease.
“These CEOs are culture carriers and they want to carry their culture as long as they can,” Karp said. “That’s added to their long-term tenure.”