Abstract

The case discusses the rise and fall of Phil Purcell in Morgan Stanley, one of the largest investment banking companies in the US. It examines how Purcell assumed the role of CEO of the company after the merger of Morgan Stanley with Dean Witter and went on to fill the company’s governing board with his loyalists. Purcell was severely criticized for the way he handled people in Morgan Stanley which led to the exodus of talented employees. During his tenure as the CEO, Morgan Stanley got involved into several legal problems. The poor governance under Purcell’s regime had an adverse affect on Morgan Stanley’s stock, which slipped by 39% between 2000 and 2005. A group of former Morgan Stanley executives started campaigning against Purcell and succeeded in ousting him from the company. After Purcell left, ex-president John Mack came back to Morgan Stanley. It remains to be seen how Mack would improve the culture and the morale of the company’s employees and improve its financial performance.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Examine the corporate governance practices at Morgan Stanley under Purcell.: Problems faced by Morgan Stanley under Purcell.: Reasons for the ouster of Purcell.

Keywords

Morgan Stanley, Corporate governance, Leadership, Governing Board, 'Group of Eight', Organization Culture, Legal Problems, Perelman, Whistle Blowing