Philip J. Purcell

Purcell began his business career in 1967 at McKinsey & Co., an international management consulting firm, traveling and working with clients throughout the United States, Europe, and Asia. When he left McKinsey to join Sears in 1978, he was Managing Director of the Chicago office—the youngest head of a major office in the firm’s history.[3]

At Sears, Purcell became Senior Vice President for Corporate Administration and Planning, reporting directly to the CEO. In addition to long-range planning, his duties included exploring acquisitions and divestitures for the company. He played a leading role in Sears’s acquisition of Dean Witter Reynolds on December 31, 1981, and became President in 1982 and Chairman and CEO in 1986. In 1993, Purcell led the spin-off from Sears and initial public offering of Dean Witter Discover. Shareholders buying the IPO made 20% per year, or 9 times their original investment by March 2005.[4]

At Dean Witter, Purcell saw the potential of the asset management business well ahead of other firms. The approximately $11 billion in money and mutual fund assets at Dean Witter in 1982 grew to more than $100 billion by 1997 and to about $400 billion by 2004. He started the Discover Card from scratch in 1986; by 2006 it had grown to more than 50 million accounts and $1.5 billion in pre-tax income.

Purcell’s record of building value for shareholders continued following the acquisition of Morgan Stanley by Dean Witter. During the time Purcell headed Morgan Stanley, the firm outperformed market indices by a wide margin. An investment in Morgan Stanley after the merger in 1997 returned three times the original investment by March 4, 2005—a return of 16% a year compared to 5% for the S&P 500.

Morgan Stanley also achieved significant gains in the league table rankings throughout the eight years Phil Purcell was CEO. Morgan Stanley ended 2004 with the best competitive rankings in the history of the firm: #1 in global equity trading, #1 in global equity underwriting in 2004 for first time since 1982, #1 Global IPO market share in 2004, #2 in global debt underwriting in 2004 (with steady gains since late ‘90s), #2 in completed global M&A in 2004.[5]

Purcell was at the helm of Morgan Stanley on September 11, 2001, when the terrorist hijacked planes hit the twin towers of the World Trade Center. More than 3,500 Morgan Stanley employees worked in the World Trade Center. Based on the firm’s experience in the earlier 1993 WTC bombing, contingency plans were in place long before 9/11. As a result, there was a rapid evacuation and organized follow-up on 9/11 that helped mitigate the terrible tragedy. Morgan Stanley employees at the WTC helped save lives of both Morgan Stanley employees and many others.[6]

Purcell resigned as CEO of Morgan Stanley in June 2005 when a highly public campaign against him by former Morgan Stanley partners (the Group of Eight)[7][8][9] threatened to disrupt and damage the firm and challenged his refusal to aggressively increase leverage, increase risk, enter the sub-prime mortgage business and make expensive acquisitions, the same actions related to the financial crisis of 2007–2008.[10] The events that led to his resignation are covered in detail in a 2007 book by Patricia Beard, Blue Blood and Mutiny: The Fight for the Soul of Morgan Stanley.

One former business associate, Jim Cramer, wrote: "It wasn’t just bad management that brought down the Morgan Stanley chief. It was also the fact that no one could stand him."[11]