Cultural problem: Gorman testifies before the US House Financial Services Committee on Capitol Hill in Washington. The veteran banker says he will retire in the next 12 months, training the spotlight on diversity on Wall Street. — AP
NEW YORK: The absence of women from the slate of potential Morgan Stanley chief executive officer (CEO) successors underscores the importance of cultivating and keeping diverse talent, corporate governance experts say.
Morgan Stanley co-presidents Ted Pick and Andy Saperstein, and head of investment management Dan Simkowitz, are the front-runners to succeed James Gorman, who said he plans to step down as chief executive within a year.
The most recent US workforce diversity data comprehensively reported by the Wall Street banks shows women were less represented in leadership positions at Morgan Stanley than at other top US banks as of 2021.
Morgan Stanley said 25% of those holding “executive/senior officials/manager” roles in the United States were women, versus 29% for JPMorgan Chase and Co, 36% for Bank of America Corp and 38% for Citigroup Inc.
Among major peers, only Morgan Stanley’s archrival Goldman Sachs Group Inc had less female representation, at 23%.
Moreover, 80% of Morgan Stanley’s top leaders in the US were white, more than the others that reported such representation at between 67% and 78%.
A Morgan Stanley representative declined to comment.
Mary Beth Gallagher, director of engagement for Domini Impact Investments LLC, which invests with environmental, social and governance (ESG) considerations, said firms need to have a pipeline of diverse talent if they want to find diverse leaders, which would involve recruiting and career-building efforts.
“The logic is to ensure you have the right people with the right skill sets and decision-making authority. You need to have cultivated those leaders,” said Gallagher.
To be sure, Morgan Stanley has several women in top roles, including chief financial officer Sharon Yeshaya.
She is one of three women on its 14-member operating committee. There are four women on its 14-member board of directors and four directors who identify themselves as ethnically diverse.
Across the financial industry, women held just 21% of service board seats, 19% of C-suite roles and 5% of CEO jobs in 2021, according to a Deloitte study published last year.
Wall Street has struggled to shake off its image as an “old boys’ club”. In recent years, however, banks have made strides on diversity as they seek to appeal to millennial workers and are under pressure from social movements like #MeToo and Black Lives Matter.
A major milestone came in 2021, when Citigroup named Jane Fraser, formerly its president, as its CEO.
Doug Chia, president of consulting firm Soundboard Governance, called the lack of diverse senior leaders at Morgan Stanley and other firms “a classic pipeline problem” because it limits the pool of candidates that companies could promote to higher jobs.
“If there’s a dearth of candidates, then you have got to try harder” to attract them, he said. — Reuters
