Philip J. Purcell is driving fast down a wide Western highway as country music fills the plush interior of his Mercedes jeep. It's a glorious summer day in Salt Lake City, where the deposed Morgan Stanley chief executive has come to lick his wounds, seeking the solace of hometown friends and family — as far removed as a man can get from the serpentine intrigues of Wall Street.
"Go for a walk, say a little prayer and take a deep breath of mountain air," croons the country-and-western singer Toby Keith. A smile on his face, Purcell cranks up the volume. "Sit on the porch and give my girl a kiss. Start livin'. That's the next thing on my list."
So how does he feel? Never one for many words, Purcell seems content to let the corn-pone lyrics do the talking for him. Normally a tightly wound man, he seems almost relaxed in his chinos and casual shirt, as if prepared to forget the searing war that he fought and lost at Morgan Stanley, leading to the ignominious end of a 38-year business career. "This is my new life," he said.
A new life it may well be, filled with the simple pleasures of golf outings with his seven sons and cross-country road trips with his wife, Anne. He may be $44 million richer, thanks to his severance package, but that is not how a man like Purcell keeps score. Like a wounded gunslinger, beaten to the draw by a slicker, more audacious foe, there is no doubt that underneath the taciturn reserve lies a man who has not made his peace with the injustice of it all.
In the annals of Wall Street putsches, Purcell's humiliating fate is unprecedented. A sitting chief executive at a large public company was forced from his job in three explosive months without shareholders receiving any premium in return. Even CEOs with no love for Purcell admit to being shocked, if not a little scared, by the precedent.
Purcell's detractors — and there are plenty of them — as well as a large number of the firm's shareholders say he has only himself to blame. Following the 1997 merger with Dean Witter, he never completely integrated the unit with Morgan Stanley.
What's more, they say, his aloof manner left him no base of support after units that were dear to him — like brokerage and credit cards — began to drag down the bank's institutional businesses. His Machiavellian executive suite tactics and the stock's poor performance in recent years made his position all the more precarious, these people say, forcing his board to take action.
Purcell is a reluctant interviewee, unlike his more press-savvy peers such as John J. Mack, the current chairman and chief executive of Morgan Stanley, and James Dimon, the president of J.P. Morgan Chase. Throughout Purcell's professional career, dating from his days as a Sears executive, he said he has believed that as long as your business is well run, the press will take care of itself. Questions about his motives and his thoughts can elicit long pauses and occasional flashes of irritation. "If it were not for the articles and possible books, this would be a wonderful way to live the rest of your life," he said, with a tight grin, referring to his languid Utah days.
Sitting in a small office at Judge Memorial Catholic High School, his alma mater in Salt Lake City, Purcell pulled out a single piece of paper showing that Morgan Stanley's stock increased 690 percent since Dean Witter went public in 1993, outperforming the Standard & Poor's 500-stock index and peer companies like J.P. Morgan Chase and Merrill Lynch (Citigroup, with its 998 percent return, leads the pack).
It's an unpretentious piece of work, just a few lines of numbers, and is a far cry from the glossy, color-coded pitch books that Purcell and his executive team would show to board members, investors and the news media during the leadership battle this spring.
With the help of one of his sons who knows his way around a computer, Purcell had pulled together the numbers the night before at his Park City home to show to a reporter and to defend his time at Morgan Stanley.
"If I look at my career in the context of the letter" — referring to the first letter written by the eight retired Morgan Stanley executives in March, calling for him to step down — "I look at this and it's pretty damn good — OK?" he said. "In my judgment, we were on the right track, and I believe that people in businesses with a vast majority of the firm's profits supported that direction."
In many ways, it is this letter and the placid 1950s aura that surrounds Judge Memorial that best illustrate the clashing poles of Purcell. Set off of a quiet suburban street in Salt Lake City, Judge Memorial, with its rigid Catholic mores and its 1952 hardwood basketball court (where Purcell starred as the team's center and where he remains an enthusiastic patron), evokes a purer, uncomplicated time for Purcell. He met his wife there (whom he married when he was 21); and his best friend from the 1961 basketball squad, Jim Yerkovich, stayed on as the basketball coach and greeted him warmly at the school's entrance upon his return that day.
In fact, after graduating with a master's in business administration from the University of Chicago in 1967, Purcell seriously considered returning to Salt Lake City to work in his father's insurance agency. Top of his business school class, he had whittled a raft of offers down to one from McKinsey & Co. and — believe it or not — an opportunity to join Morgan Stanley in New York as a junior investment banker. "Working for my dad would have been a great life, and he was disappointed," Purcell said. "But I told him that I was going to do something in big business."
It was a seminal decision for Purcell: While his wife was pushing for a return to the comforts of home, his ambition was leading him to the rougher corporate world and a stint at McKinsey that would lead to Sears and eventually the top job at Dean Witter in 1986.
As for the letter, which was sent to Purcell and his board on March 3, it triggered some of his darker impulses as he engaged in a bitter battle with the so-called group of eight who wanted him out. In his view, he was still the best man for the job.
"We were doing what we believe was right for shareholders, clients and employees," he said.
During the ordeal, popular executives were forced from their jobs. And Purcell even went so far as to get his board to approve a $200 million pool that was to be allocated to chosen bankers in order to secure their loyalty to the firm.
From the beginning, Purcell said he recognized the severity of the letter, given the standing of the dissident executives at the firm. Morgan Stanley's investment bankers, many of whom also saw Purcell as a disengaged leader who did not sufficiently value the contribution of their businesses, agreed with his prognosis.
"Phil, this ain't no Scott Sipprelle letter," growled Joseph R. Perella, the grizzled deal maker and mentor to the firm's investment bankers, according to people who were briefed on the conversation. Purcell had tracked him down in California at a semiconductor conference and read to him, word for word, the contents of the letter. Sipprelle, a former Morgan Stanley banker and manager of a hedge fund, had sent a similar letter a few months earlier that many saw as a bullet that Purcell might be able to dodge.
Although Purcell has committed billions of dollars in capital to investment banking at Dean Witter and Morgan Stanley, there has always been a sense that he has doubted that bankers could continue to bring in the rich returns to justify their high pay. Wary of their compensation, ego and appetite for risk, he has tended to prefer the more predictable earnings and calmer personalities that retail brokerage, asset management, credit cards and sales and trading offered.
Asked to explain the roots of the spring rebellion, he acknowledges that the tension between Morgan Stanley and Dean Witter factions never really disappeared following the 1997 merger.
"John Mack and I worked extremely hard to make the deal a merger of equals, which would result in a one-firm firm," said Purcell, borrowing Mack's favorite trope. "And in a large measure, we have been successful."
But not successful enough. People close to Purcell point to the long-standing resentment among Morgan Stanley bankers over the terms of the merger. Despite the 10 percent premium that Dean Witter was paying, as well as its larger market capitalization, there was a sense that Morgan Stanley was the acquirer, not Dean Witter, and should receive the choice jobs as a result.
While many explanations have been put forward to explain how Purcell could have lost control of his board and firm so quickly, none is as compelling as his failure to cultivate a strong successor to himself after Mack left the firm in 2001 following a failed bid for Purcell's job.
Miles L. Marsh, the lead director of the board, said that a number of internal candidates had emerged at the time that the group of eight mounted its challenge. Among those being considered were: Vikram S. Pandit, who ran institutional securities; John P. Havens, the head of equities; Zoe Cruz, the head of fixed income; and Stephen S. Crawford, the chief strategy officer whose career had been fast-tracked by Purcell. But Marsh concedes that they were several years away from being ready for the top job.
None of these candidates, however, had the credibility of Mack. And despite all that has been made about hard feelings between him and Mack, Purcell said their clashes centered on executive personnel decisions and were never about strategy. "John and I have never disagreed about the businesses," he said. That point was underscored last week when Mack decided to keep the Discover Card business, a unit that Purcell created from scratch, under the Morgan Stanley umbrella. Mack declined to comment.
Purcell, who is 61, has told his closest associates that he always had a date in his mind for when he would depart, which would have been well before his 65th birthday.
It is easy to think how differently things would have turned out if he had agreed to step aside in 2001, when Mack approached him for his job, claiming that there had been an agreement between them. The stock was trading at more than $80 (on Monday it closed at $52.29) and the merger was seen as a success. Purcell could have gone out like Michael Jordan, burying a jumper for a sixth championship ring. "If I said to John in 2001, fine, that would have been easy. We could have done it Michael Jordan-style."
While he may have had a date in mind, Purcell is relentlessly competitive and was not about to give up his title under pressure. But it is easy to see why he might second-guess that decision. Months after Mack left in 2001, the Nasdaq stock market crashed, laying bare the festering problems within the brokerage division, punishing the firm's high-flying stock, and setting the stage for the challenge to Purcell's leadership.
Purcell's explanation for stepping down has not changed much from his initial words in June. He said that he had become a distraction for the firm and that the campaign waged by the dissident executives — in tandem with some bankers within the firm as well as outside investors — was showing no sign of letting up. But the passing of time has made it no easier to stomach.
"The G-8 political campaign was waged with real passion," he said. "And I don't believe it was fair or accurate. But as your dad tells you when you are a kid, life is not always fair. I decided for the good of the firm to step down."