The board of directors of Morgan Stanley (NYSE: MS) has sent a letter to shareholders defending John Mack, the company's chairman and CEO, and urging rejection of one shareholder proposal to push him out of the chairman's job. According to MarketWatch, "The endorsement came in response to a letter earlier this month from CtW Investment Group, an organization representing several unions, calling on shareholders to withhold their votes from Mack." The letter also suggested that two Morgan Stanley directors be pushed out.
Shareholders in the investment bank are understandably red with rage. Morgan Stanley's stock has lost almost 50% of its value over the last year and, at one point, was down almost two-thirds. The brokerage has already fired its president, but some who have lost money do not think that is enough. The CEOs at Merrill Lynch (NYSE: MER) and Citigroup (NYSE: C) have already lost their jobs because their companies where so badly hurt by investments in subprime mortgage instruments.
Separating the CEO and chairman jobs at banks and brokerages is probably a good idea, especially if the chairman has the role of overseeing risk management. Boards seem to have been blind to the massive chances that financial companies took when they put substantial sums into volatile securities.
Mack should count himself lucky to keep his job at all. Remaining CEO and passing the chairman's job to someone else to encourage a balance of power make sense and should be a model for other firms. Someone has to keep an eye on the risk profile of companies that have already lost billions of dollars.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
3-23-2008 @ 12:39PM
sonnype said...
I think the shareholders should get rid of the Board of Directors for their lack of oversight and letting things deterioate
3-23-2008 @ 1:41PM
Dereck Dodson said...
The Fed and Ben Bernanke are full of bull!%*&, all this the rate cuts and loans do nothing but keep payrolls going and the lights on in those loans, huge office buildings and business campuses that they lost the financing for from the World Fortune in a mutinous standoff by George W. Bush, his appointees, and organized criminals and crime familes in major corporations like GM, Ford, JP Morgan Chase, and Bear Stearns. They are tryning to hold on to a falling U.S. economy with razor wire using a media charade and cover up to hide the blood! But one thingd for sure, the coporate killers have been called out to keep those Executives in their big houses, limos, and expense accounts by cutting staffs to bear necessity!
3-23-2008 @ 7:27PM
husain said...
In the best interest of any firm, it makes sense to have little top management changes in a short period. And the same goes with Morgan Stanley as well. They have already had their share of management changes after the Phil Purcell episode. So seems ousting Mack was never a good option.
3-28-2008 @ 10:31AM
aoarcillajr said...
Not only is this jerk Mack (a legend in his own mind) should have been fired, without any golden parachute and other payments, but also the entire Board who have been very lax in their oversight responsibilities. This whole debacle should not have happened if everybody is doing their job for what they are being paid handsomely. Foregoing his bonuses, etc. is certainly not enough. He will make sure that it is made up in some other ways.