State Street Corp. chief executive Jay Hooley will retire from the job at the Boston-based financial services giant at the end of 2018, after more than 30 years there.
The change in leadership atop one of Boston’s biggest companies was announced Tuesday. Ron O’Hanley, a former Fidelity executive who has been running State Street’s investment management division for the past two years, was tapped to succeed Hooley. In the interim, O’Hanley will be president and chief operating officer of the entire company. Meanwhile, Mike Rogers, who had been in those positions, will retire at the end of this year.
Hooley, 60, will remain as chairman through 2019.
A well-known presence in Boston’s business community, Hooley led State Street through much of its recovery from the Great Recession and has tried to reposition the company, which provides services to investment firms, as a technology business.
As part of that effort to digitize the company’s services and approach, Hooley oversaw several rounds of layoffs while facing pressure from shareholders at various times to control costs. The company’s workforce has still grown significantly on his watch.
“I picked up the baton immediately post-crisis,” Hooley said. “We all had to adjust to a new economic reality and a new regulatory reality.”
The company’s shares have roughly doubled in value, recently reaching a record high in the $90 range, since Hooley became CEO in March 2010. But the stock still underperformed the broader Standard & Poor’s 500 index over the same time.
Hooley said he informed the board earlier this year that he wanted to retire within two years. The board, he said, decided relatively quickly that O’Hanley was the right successor.
“The board’s always evaluating the talent who might have the potential to go to the next level,” Hooley said. “He wasn’t brought on with that purpose” to become CEO, “but after he got here, people saw his talent and capabilities.”
Keefe Bruyette & Woods analyst Brian Kleinhanzl wrote in a report that the long stretch between the announcement and O’Hanley’s official ascension to CEO should help ensure an effective transition, partly by giving O’Hanley more exposure to State Street’s asset servicing businesses. Kleinhanzl’s one concern? That State Street selected someone of O’Hanley’s age, 60, instead of a younger executive.
O’Hanley had been one of Fidelity’s top executives before leaving in 2014 after then-Fidelity chief Ned Johnson picked his daughter, Abby, to be president and his likely successor. John Bonnanzio, an editor with the Fidelity Insight newsletter, said O’Hanley helped Fidelity expand into the low-margin business of index funds, which have exploded in popularity in large part because of their low costs. State Street, meanwhile, has a well-established business of low-cost index and exchange-traded funds.
“My sense of it is he understood that if you offered these index products, at least the money won’t leave Fidelity,” Bonnanzio said. “And when the index craze wanes, at least Fidelity would be more positioned to keep that money.”
Cyrus Taraporevala, another former Fidelity executive who recently joined State Street, succeeds O’Hanley as president of State Street Global Advisors.
Hooley expanded State Street’s global workforce from about 29,000 to roughly 36,000 today, with 11,600 in Massachusetts.
While remaining in its signature headquarters tower on Lincoln Street, State Street consolidated other operations in Boston into a new building in the Fort Point neighborhood more than three years ago, with enough room for 3,500 workers.
“State Street made a pretty good statement about their commitment to Boston by locating that facility here, and reinforced it through Jay’s tenure through some of their philanthropic efforts,” said Jim Rooney, chief executive of the Greater Boston Chamber of Commerce.Jon Chesto can be reached at firstname.lastname@example.org. Follow him on Twitter @jonchesto.