The abrupt departure of Brian M. Storms, the CEO of MMC Corp.'s brokerage operations Marsh Inc., raises questions about whether Marsh will follow through with its planned radical transformation.
MMC Chairman and CEO Michael Cherkasky said in a statement "We need a different set of leadership and operational skills to complete the successful transformation of Marsh," clearly implying that Storms' personality was the reason for his departure.And Cherkasky repeated his commitment to Storms' strategy. "Our long-term strategy is sound and a solid foundation has been built." Cherkasky said.
Storms declined comment.
MMC Corp. announced the Storms departure on Friday, Sept. 14 after a turbulent week. The previous Friday, CEO for the Americas, Timothy J. Mahoney, Jr., had announced that he was leaving Marsh to join Integro Ltd, the brokerage formed by former Marsh executives.
Over the weekend, Mahoney changed his mind after a conversation with Storms, insiders say. Meanwhile, in the wake of the Mahoney announcement, there was maneuvering among other top Marsh executives with appeals made directly to Cherkasky.
Efforts by the Marsh leadership team to assuage investors' concerns about the mediocre performance of the Marsh brokerage accelerated, but proved unsuccessful. On Sept. 6, Goldman Sachs issued a blistering critique of Marsh and downgraded the stock.
If Marsh management thought Storms' departure would buoy the stock, it didn't. MMC's stock fell to its lowest levels since the Spitzer investigation. Ironically, after Storms left, Goldman Sachs issued another analysis which criticized Marsh for losing Storms.
Storms' strategy to increase brokerage revenues and improve margins had yet to see big results, although he predicted in a summer interview that revenue increases would hit the MMC bottom line early in 2008. His changes at the brokerage operations were comprehensive. The heads of the 10 largest offices were replaced during the past year.
A longtime Marsh client executive explained that Storms' changes were needed and his strategy was working. But his shortcoming centered on his people skills. "He made some very big clients quite unhappy with us," the Marsh executive says.
October 15, 2007
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