News that James Gorman is planning to step down as CEO of Morgan Stanley has focused attention on the lack of female CEOs at America’s biggest banks.
Speaking at Morgan Stanley’s annual shareholder meeting Friday, Gorman said he plans to step down sometime in the next 12 months. Morgan Stanley’s MS, -2.66% board, he added, “has identified three very strong senior internal candidates for consideration as the next CEO.”
Attention has been focused on the three executives that run Morgan Stanley’s main business lines as potential candidates to succeed Gorman. All three are men. Edward “Ted” Pick is head of Morgan Stanley’s institutional securities group, Andy Saperstein leads Morgan Stanley Wealth Management and Dan Simkowitz is head of investment management. Pick and Saperstein are also Morgan Stanley co-presidents. Morgan Stanley has declined to comment on any potential candidates by name.
Female CEOs are still very much in the minority in the C-suites of major U.S. banks. At the end of 2021, the U.S. banking industry had more female than male employees, but fewer than 5% of publicly traded banks had female CEOs, according to data from S&P Global Market Intelligence. Of the 10 banks with women at the helm, the largest is Citigroup C, -1.47%, which appointed Jane Fraser CEO in March 2021. Fraser is the first woman to lead the bank.
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It is a similar story on the other side of the Atlantic. In a report released in September, DBRS Morningstar said that in 2021, only five out of 43 European banks it surveyed had a female CEO. Only four of the banks had a female board chair, the report found.
So what can banks do? In a report released in 2020, Deloitte said that in order to increase the diversity of their candidate pools, financial-services firms need to recruit more women to jobs in the areas CEOs have historically come from, such as business, finance and operations. “This can be part of a company’s comprehensive effort to achieve greater gender diversity in leadership and throughout the organization to better reflect their workforce, customer base, and society as a whole,” Deloitte said. “It will likely require some significant changes in culture, talent development, and succession planning.”
Prior to becoming CEO at Citigroup, Fraser was the company’s president and CEO of its Global Consumer Bank division. She was also in charge of the company’s efforts to navigate the COVID-19 pandemic, which she continued after becoming CEO.
A diverse slate of candidates can also provide broader benefits for banks, according to Deloitte. “Companies could also reconsider what it takes to become a CEO, and how a more diverse pool of candidates — not just by gender but also background and capabilities — might benefit their competitiveness and profitability over the long term,” it said in its report.
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In its report, Deloitte also identified a “multiplier effect” around the appointment of women to senior leadership roles. “Recruiting more women in high profile C-suite positions traditionally leading to CEO consideration might, in and of itself, help enhance diversity down the line,” it said.
Morgan Stanley’s stock ended Friday’s session down 2.7%, compared with the S&P 500’s SPX, -0.14% 0.1% decline.
Steve Gelsi and Emily Bary contributed to this report.