Thursday, June 19, 2008

John Mack - CEO - Morgan Stanley

John Mack returned to Morgan Stanley's Manhattan headquarters, on June 30, 2005 as CEO.

Mack spoke of his dreams for Morgan Stanley, a firm he had worked to build into a Wall Street powerhouse since joining in 1972 as a bond salesman. As president, he helped orchestrate the $10 billion merger in 1997 with Purcell's retail brokerage giant, Dean Witter Discover & Co.

In a speech to investors shortly after his arrival, Mack said the firm's main problem wasn't its strategy or its business mix, as was widely believed, but its culture. It had become soft and timid, missing out on growth opportunities in everything from private equity to mortgages, junk bonds to equity derivatives.

While rivals such as Goldman, Merrill Lynch, and Lehman Brothers were making acquisitions and diving into risky but profitable endeavors, senior managers at Morgan Stanley were sending people with bold notions back to the drawing board.


Mack started building out new businesses and putting vast sums of money at risk, both for the bank and on behalf of its clients, in an effort to catch up with Goldman in the ever-more-important trading business. He is also beefing up international operations, regularly traveling to Europe and Asia and beating Goldman to new markets such as Dubai.

Mack is attcking on two fronts: internally, against inertia; and externally, against a superior rival that used to be a peer. "If you go back to the mid-'90s, there was no question that we were the No.1 firm," says Mack. He has promised investors that he will double the company's pretax earnings, to at least $14 billion, by 2010.

According to him, retail brokerage business, which now has an 11% profit margin, can become as profitable as rivals' businesses, which have 20% margins. Asset management, he says, could take off once it starts offering more private-equity and hedge fund investments, as Goldman does.

But the fiery leader is also warm and engaging. He lavishes attention on employees at events ranging from strategy breakfasts to dinners with their spouses at the Morgan Library & Museum. He introduces himself to anyone he doesn't know when he rides the elevators and walks the floors.

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