When Morgan Stanley took a $9.4 billion write-down this past December, people were clamoring for chairman and CEO John Mack’s head. “He’s a chronic destroyer of value,” a retired Morgan Stanley analyst said at the time. Surprisingly, he kept his job, even as the battered bodies of chief executives at other Wall Street firms that took major write-downs fell around him.
But now CtW Investment Group, a shareholder activist group, is throwing its $1.4 trillion weight behind a campaign to persuade Morgan Stanley investors to withhold their votes for Mr. Mack, at least as chairman, and vote in an independent chairman. “The argument for John Mack stepping down as chairman is pretty strong right now,” William Patterson, the group’s executive director, told the Times. “Everything we have seen suggests that this board is excessively protective of its C.E.O. The losses that Morgan Stanley took and the risk were unwarranted.”
According to the Times, CtW isn’t saying that Mack should leave the board or resign from his job as CEO, and their proposal isn’t binding. Plus, the board is still behind Mack. “We are comfortable with John Mack’s role as both C.E.O. and chairman of Morgan Stanley,” the board’s spokesperson told the Times. Oh, no. They’re comfortable with him? This is worse than we thought. The road to resignation is always paved with declarations of support.