Morgan Stanley on Tuesday said it was seeking a new head of its investment management division. Its new chairman and chief executive, John Mack, used the opportunity to announce his commitment to expanding the business.
Mr Mack asked Owen Thomas, who heads Morgan Stanley’s real estate division, to add the responsibility of serving as Mitchell Merin’s replacement as head of investment management until a successor could be found.
Mr Merin, who is retiring, has led the business for seven years. Last year he had hoped to find a number two who could replace him, but the search was put on hold due to the battle over the leadership of Mr Mack’s predecessor, Philip Purcell.
Mr Thomas will report to Zoe Cruz, acting president. This decision by Mr Mack is another indication he wants Ms Cruz to play a prominent role in improving Morgan Stanley’s businesses as he builds his management team.
Mr Mack’s statement that he was committed to the investment management business also provided further proof that he believes the failure of the 1997 merger of Morgan Stanley and Dean Witter was in execution, not strategy.
Mr Mack was a proponent of the merger and helped to lead the company until 2001 when he lost a power struggle with Mr Purcell. Since returning, he has announced his intention to fix Morgan Stanley’s ailing brokerage and keep its Discover credit card business.
Mr Purcell founded Discover but was considering spinning it off to help preserve his job. Some analysts and investors had hoped Mr Mack would follow through on some combination of shedding Discover, the asset management division and the brokerage.
Mr Merin was a leading figure of the Purcell regime at Morgan Stanley, and served with him at Dean Witter before the merger. People familiar with the situation said he was one of several executives who received guaranteed pay packages after Mr Purcell decided to resign, a sore point amongst employees.
Morgan Stanley’s investment management business contributed more than 12 per cent of Morgan Stanley’s profit before taxes in 2004, up from 8 per cent in 2003. Mr Merin is credited with improving the performance of the division, albeit more slowly than some analysts and investors would have liked.