John Mack

CEOs of the future

Jim Kim — Tue, 18 Nov 2008 07:57:07 -0500

What will it take to run a big company really well over the next few years? People are talking about a new kind of CEO, an evolution from the crop that has upended Wall Street. Fortune says, "Gone is the Lone Ranger with his loyal Tontos. A more workable alternative, in an environment of increased regulation, diffuse power and stagnant stock prices: The Lifeguard." In a way that's sad--Fortune likens the next wave of winning CEOs to people whose job is to make sure employees don't drown. Has it really come to that?

My question is this: Who will emerge as the most savvy CEO of this new era. That is, who will get his company through this mess in the best form. The early money is on Ken Lewis and Jaime Dimon. Vikram Pandit has a lot of work to do. As do John Mack and the early front-runner Lloyd Blankfein.

For more:
- here's an article on CEOs from Fortune

Morgan Stanley inks deal with Japanese bank

Jim Kim — Mon, 13 Oct 2008 13:35:48 -0400

Morgan Stanley CEO John Mack made good on his word to close the Mitsubishi UFJ deal by Tuesday. The deal was apparently signed, and the stock soared. The deal terms are more favorable to the Japanese bank. It will buy $7.8 billion of convertible preferred stock that carries a 10 percent dividend and strike price of $25.25 per share. The Japanese bank will also buy $1.2 billion in non-convertible preferred stock, also at 10 percent. Originally, the deal called for a $9 billion infusion--$3 billion in common stock at a price of $25.25 per share and $6 billion in convertible preferred stock at 10 percent, convertible at $31.25 per share. What remains fuzzy here is what assurances the government provided the investors. Previous reports held that the Treasury made some assurances regarding the value of Mitsubishi UFJ's investment if Treasury is forced to take buy into Morgan.

For more:
- here's the AP article

Morgan Stanley on the ropes?

Jim Kim — Sun, 12 Oct 2008 19:42:00 -0400

The world wasn't buying that all was well with Morgan Stanley's deal with Mitsubishi UFJ Group, which called for the Japanese giant to inject $9 billion in the ailing investment bank. Even as Morgan Stanley insisted the deal would close this week, the stock kept on falling and CDS spreads soared. In what seems like a self-fulfilling prophecy, Mitsubishi UFJ, noting the market activity, has re-opened the deals, pressing for more favorable terms. This is not good, as some see the bank as precariously poised. The latest: The Treasury has stepped in to reassure Mitsubishi UFJ Group that if the Treasury is forced to invest in Morgan, it will not wipe out their investment, according to the New York Times. Exactly how it will do this is unclear. So, like other one-time independent investment bank peers, the stock and CDS markets are really forcing CEO John Mack's hand. The outcome of this one is far from clear. Of course, the markets abhor uncertainty.

For more:
- here's the New York Times article

Morgan Stanley shares reflect fearful environment

Jim Kim — Thu, 09 Oct 2008 14:28:25 -0400

How trigger-happy are the markets right now? Just ask Morgan Stanley. Its shares plunged about 40 percent in one day earlier this week, as fears arose that the $9 billion investment from Mitsubishi UFJ was in doubt. Morgan Stanley tells Breakingviews that the deal will be finalized this weekend. That's none too soon for CEO John Mack. The issue has to be raised: the plunge took place despite the temporary ban on short selling, which runs out this week. Some may conclude that the shorts were unfairly blamed all along and that this proves it. Others might say that the selling would have been even worse. In any case, Morgan Stanley and other financial firms are no doubt hoping the temporary ban will be extended.

For more:
- here's the article

Related Article:
Morgan Stanley gets a deal after all

Morgan Stanley gets a deal after all

Jim Kim — Mon, 22 Sep 2008 12:40:23 -0400

A few days ago, people were pretty sure that Morgan Stanley and Wachovia would end up in merger, despite the iffy logic of such a combination. Some thought that sovereign wealth fund China Investment Corporation would be involved. But CEO John Mack surprised people by inking a deal instead with Mitsubishi UFJ Financial Group, which will buy up to 20 percent of the firm. Media outlets have valued the deal at about $6 to $8 billion. The news hit at roughly the same time as the news that it had agreed to transform itself into a commercial bank. The one-two punch should put Morgan Stanley out of the perceived danger zone.

For more:
- here's a CNNMoney article

Misquoting Morgan Stanley's CEO

Jim Kim — Mon, 22 Sep 2008 09:35:47 -0400

There was certainly a lot of drama surrounding Morgan Stanley over the weekend. A lot of it had to do with the fact that Morgan Stanley, which, until the news came down that it and Goldman Sachs would become bank holding companies, was thought to be in dire straights. Some of that may have stemmed from a quote attributed to CEO John Mack in the New York Times in a conversation he had with Citi CEO Vikram Pandit. The quote said something to the effect that Morgan Stanley wasn't going to make it without a commercial bank merger. Later, the newspaper retracted the quote. One could argue the quote may have added to the urgency of the moment. But I don't think we can conclude that the historic shift by Morgan and Goldman happened because of the that non-quote. There was plenty of anxiety about the two giants already. That said, the role of the media in all this hasn't really been discussed in full. Has it done a decent job?

For more:
- here's an article from TheStreet.com

Morgan Stanley on the Fannie, Freddie hot seat

Jim Kim — Thu, 28 Aug 2008 13:36:55 -0400

We tend to think of Goldman Sachs as the firm with the most influence in Washington, given the many former execs that have ended up in high public service jobs. But when it comes to the big quagmire that Fannie Mae and Freddie Mac are stuck in, the firm with the most reputational capital on the line is now Morgan Stanley, which was the low bidder for the job. Breakingviews notes that John Mack has dispatched bankers Ruth Porat and Robert Scully to sort out the mess for former Goldman Sachs exec, now Treasury Secretary Henry Paulson. It will be up to them to propose a way to salvage the GSEs. But what if the two mortgage giants implode anyway? I doubt anyone will blame Morgan Stanley. That said, a brilliant plan would generate lots of goodwill.

For more:
- here's the item

Now hear this: Morgan Stanley is hiring

Jim Kim — Thu, 31 Jul 2008 13:09:14 -0400

People tend to assume that getting hired on Wall Street right now is all but impossible--with all the layoffs. For John Mack, CEO of Morgan Stanley, that spells opportunity. The Financial Times reports Morgan Stanley is looking to hire top executives and upgrade its status in key markets, like derivatives, risk management and prop trading. In particular, it would like to add expertise in the Middle East and Asia. It has already snapped up a few former Bear Stearns employees. Morgan Stanley has saved $1 billion by cutting about 10 percent of its employees, mainly in investment banking, fixed income and research. Those savings are being redeployed.

For more:
- here's the FT article

Is Wall Street credibility an issue?

Jim Kim — Mon, 21 Jul 2008 13:28:33 -0400

Breakingviews notes that a lot of CEOs should "now help themselves to generous portions of the sanguine words they have uttered over the last few months." Lehman Brothers' Dick Fuld, JPMorgan Chase's Jamie Dimon, Goldman Sachs' Lloyd Blankfein and Morgan Stanley's John Mack all publicly suggested that the worst was over. But that hasn't turned out to be the case. Perhaps the optimistic words were justified at the moment, but as of now, such pronouncements have been proved premature. Here's another example. In late 2007, Bank of America CEO Ken Lewis uttered a memorable phrase: "I've had all the fun I can stand in investment banking." He wanted to scale back dramatically. As of late, however, the bank has been staffing up, as investment banking revenues have soared to near-record levels. Circumstances can change, people understand that. They've also learned to appropriately discount CEO pronouncements. Trust, but verify.

For more:
- here's the Breakingviews article

Related Article:
Can Wall Street firms be believed?

Shareholders meetings this year seem mundane

Wed, 07 May 2008 06:59:59 -0400

You might have thought there would be a lot of fireworks at annual meetings of top Wall Street banks. But it hasn't really turned out that way. To be sure, there were some small victories that shareholders might point to. For one thing, Merrill Lynch has agreed to elect directors annually for one-year terms, a move shareholder activists favored. The company explained that activist groups convinced the board such a move is in line with best practices.

And then there are the more subtle, non-victory victories. One could argue that the move by C. Michael Armstrong to step down as head of the audit and risk committees at Citigroup was a win for shareholders. Ditto for the move by Mary Pugh to step down as head of Washington Mutual's finance committee; her money management firm was said to have a close relationship with the thrift. Shareholders led by the union group CtW opposed both.

In some cases, such as Citigroup, shareholders had some pointed questions. But for the most part, we haven't seen anything really dramatic. In the case of struggling Morgan Stanley, the annual shareholder votes seemed to deliver a resounding victory for CEO John Mack. Then again, a lot of CEOs already have rolled in this industry. It's hard to top that via proxy votes on sometimes arcane issues. - Jim