Morgan Stanley’s investors are deeply disappointed about the board’s Sunday decision to leave Philip Purcell in both his positions as Chairman and Chief Executive, preparing ground for a prolonged battle for the chairman’s post. Investors have long been frustrated about the turmoil at the company’s helm, Purcell’s rare appearances at the company, the outrageous rule that required a 75% board vote in order to oust Purcell, and the stock price that trailed competitors.

Morgan Stanley’s board in Sunday’s meeting removed a bylaw that called for a 75 percent vote to oust chief executive, and revealed plans to name a lead outside director to improve governance at the firm. The board, while making it easier to remove Philip Purcell whose leadership raises questions in the company, also voiced strong support for his leadership.

"We have said consistently that management enjoys the confidence of the board and we reiterate that commitment today," the statement of the board says.

The board also said that no other spin-offs are intended except the Discover Card business. The eight dissident former Morgan Stanley executives who are waging a war against Purcell, suggested on April 22 the creation of two separate companies ,where one would service institutional clients, including pensions and mutual funds, and the other would concentrate on individual investors.