The succession of the CEO of Morgan Stanley highlights the diversity gap on Wall Street

May 21 (Reuters) – Corporate governance experts say the absence of women on the list of potential CEO successors at Morgan Stanley underscores the importance of cultivating and retaining diverse talent.

Morgan Stanley co-chairmen Ted Beck and Andy Saperstein, and chief investment officer Dan Simkowitz, are the front-runners to succeed James Gorman, who said Friday he plans to step down as CEO within a year.

The latest US workforce diversity data comprehensively reported by Wall Street banks shows that women were less represented in leadership positions at Morgan Stanley than at other major US banks as of 2021.

Morgan Stanley said that 25% of those in “executive/senior officers/manager” positions in the US are women, compared to 29% at JPMorgan Chase & Co (JPM.N), and 36% at Bank of America Corp (BAC). .N), and 38% to Citigroup Inc (CN). Among major peers, only Morgan Stanley’s arch-rival, Goldman Sachs Group (GS.N), is represented by females, at 23%.

Moreover, 80% of Morgan Stanley’s senior leaders in the US were white, more than others, who reported such representation at between 67% and 78%.

A representative for Morgan Stanley declined to comment.

Companies need to have a diverse talent pool if they want to find diverse leaders, said Mary Beth Gallagher, co-director of Domini Impact Investments LLC, which invests with environmental, social and governance (ESG) considerations, which could include recruiting and positioning – construction efforts.

“The logic is to make sure you have the right people who have the skill sets and the decision-making authority,” Gallagher said. “You need to develop those leaders.”

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Morgan Stanley certainly has many women in top positions, including CFO Sharon Yeshaya. She is one of three women on the 14-member operating committee. There are four women on its 14-member board of directors and four directors who self-identify as ethnically diverse.

Across the financial industry, women held just 21% of service board seats, 19% of executive positions, and 5% of CEO positions in 2021, according to a study published by Deloitte last year.

Wall Street has struggled to shed its image as an “old guys club”. However, in recent years, banks have made strides toward diversity as they seek to attract millennial workers, and under pressure from social movements like #MeToo and Black Lives Matter.

A major milestone occurred in 2021, when Citigroup appointed Jane Fraser, its former chairwoman, as its CEO.

Doug Shea, president of the consulting firm Soundboard Governance, called the lack of diverse senior leaders at Morgan Stanley and other companies a “traditional pipeline problem” because it limits the pool of candidates companies can promote to higher positions.

“If there is a dearth of candidates, you have to work harder” to attract them, he said.

Additional reporting by Ross Kerber in Iowa City and Simon Jessop in London; Editing by Greg Romeliotis and Rosalba O’Brien

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