'Enormous waste': Morgan Stanley CEO rips in-person annual meetings

Brendon Thorne/Bloomberg

James Gorman, with one foot out the door after 13 years as the boss at Morgan Stanley, invoked the license to speak his mind by offering two corporate-governance ideas that could irk many shareholders.

First, Gorman said Tuesday that when he becomes executive chairman — a role he will assume when he steps down as CEO — he has no plans to resume in-person shareholder meetings. Such events were halted at Morgan Stanley, and across the industry, at the onset of the pandemic.

Even before COVID-19 forced companies to transition to a virtual format, Gorman was critical of such meetings. On Tuesday, he said that "more people from security" attended in-person annual meetings than shareholders.

"So let's just be honest," Gorman told analysts during the company's second-quarter earnings call. "It was an enormous waste of time and money, and while one or two people might like asking a question in person, I just don't think it's a good use of time and money."

Gorman also said that if he was the "god of finance," he would ditch quarterly earnings reports in favor of reporting every six months. As a public company, Morgan Stanley must report every three months, according to Securities and Exchange Commission regulations.

Back in 2018, then-President Trump asked the SEC to study a six-month reporting system after speaking to a CEO who suggested the change. Trump argued that less frequent reporting would offer greater flexibility and save money.

Two years earlier, a group of business executives led by JPMorgan Chase CEO Jamie Dimon called for scrapping quarterly earnings guidance, saying that it leads to an outsize focus on short-term profits.

Gorman, who has been at the helm of Morgan Stanley since early 2010, announced plans to retire as CEO during the company's annual meeting in May. The board of directors has identified three internal candidates to succeed him.

And while the firm has not publicly identified those candidates, Ted Pick and Andy Saperstein, the firm's co-presidents, and Dan Simkowitz, head of the investment management unit, are widely viewed as Gorman's most likely successors.

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Gorman said Tuesday that the exact timing of the CEO change hasn't been established, but he expects it to happen before the investment bank's next annual meeting in May 2024.

Part of figuring out when exactly to step down involves getting certain tasks and projects wrapped up or moving forward, Gorman said. Those efforts include figuring out how Morgan Stanley will be affected by the latest Basel III capital rules, which are expected to be unveiled next week.

"There are a few things I think, just given my tenure, I can probably get done that will help the new CEO get off to a great start, and that is my intent," Gorman said. "I want somebody to do this job … better than I've done it for the next several years and to thrive in it, and the best way to help them is to get them off to a good start."