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"A Dissident is Here"


"Can't we just pat them on the head and give 'em Luby's gift certificates?"


"Escape is never, the safest path. A dissident is here." - Pearl Jam

This Morgan Stanley (MWD) thing just becomes more fascinating and deeply weird. To put the weirdness in context let's first consider the portions of the drama which, while troubling and genuinely sad, are not unusual:

  • Management shake-ups in the wake of mergers are not unusual. Much more rare is a merger that doesn't result in human costs euphamistically termed "downsizing" or, if you're really doing the happy face thing, "right-sizing!".
  • Discontent amongst those on the fuzzy end of the downsizing lolly is not unusual. It would be very hard to find ex-employees who didn't disagree with those who "ex-ed" them.

I challenge anyone to find a merger that didn't result in lost jobs and disgruntled former employees with their own ideas on the direction of their former employers. The gossip making the rounds about the particulars of the exits at Morgan are colorful but anyone who has been involved with these things knows that they aren't unusual.

When I was a consultant I had gigs at Sears (S) and Kmart (KMRT). It was the early 90's. You want stories? Friends, if I were the kind of guy to leak such things I could tell you some stories. People react emotionally when jobs they have invested so much of themselves in get taken away from them. Those are the "efficiencies" I-Banks pitch to clients when coming up with these transactions.

What's unusual here, at least to me, is the amount of influence the "Group of 8" has been able to exert. I haven't ever seen a retired exec who didn't disagree with his replacements. They were invariably smarter managers who ran a much tighter ship than the guys who ran them out. The difference here is that Morgan's current management has to actually listen to those complaining.

Attribute the level of influence to what you will. Sarbanes-Oxley, activist shareholders in general, a New York-centric media bias inflating the MWD story... whatever. The fact is that up until very recently boards of directors responded to the grousing of ex-employees with a yawning "What... you guys are still here?"

These days boards are forced to hamstring themselves (even while "supporting Purcell") to appease a group that, while no doubt having the best interest of MWD in their collective view at heart, has done nothing of late except crush the morale of the place and force Morgan Stanley into a neccessarily defensive, rear guard posture.

It's not good business for companies to be forced to drop everything everytime they hear "a dissident is here". This activist thing continues to grow. I fully expect it to go way too far and result in tears, on a net basis.

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No positions in stocks mentioned.

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