As a Wall Street titan struggles with dissident shareholders and financial issues following a merger, how should the firm respond?
As a Wall Street titan struggles with dissident shareholders and financial issues following a merger, how should the firm respond?
The Sanford C. Bernstein & Co. Center for Leadership and Ethics Case Series
In 2005, Morgan Stanley was facing a series of crises stemming from its 1997 merger with Dean Witter, Discover & Co. The transaction brought Dean Witter Chief Executive Philip Purcell to the helm of the newly merged company, while John Mack, who had previously served as Morgan Stanley's president, reportedly had a handshake deal to succeed Purcell as early as 2002. Nevertheless, a power struggle led to Mack's 2001 resignation. With the firm delivering sub-par earnings during the following years, a group of ex-Morgan Stanley executives launched a public battle to demand corporate governance changes. By June 2005, the board of directors had decided to rehire Mack, replacing the ousted Purcell. In this case students consider Mack's options to revive the company's reputation and performance after studying corporate governance issues, financial data and proposals from dissident shareholders.