Former CEOs Stay on to Mentor at Diversified Trust

Diversified Trust will keep two former chief executives to mentor Michael Gragnani when he becomes CEO in January. The Memphis-based, employee-owned trust and wealth manager oversees about $15 billion in client assets. Current CEO and co-founder Samuel (Sam) Graham will move to the chairman role, and co-founder Larry Bryan will continue as director emeritus with client responsibilities. The board requested five years’ notice before Graham stepped down to allow a deliberate transition process.

The company combined an internal promotion with a new strategic plan and its ownership model to guide the succession. Around 70 employees hold company stock, and no single shareholder owns more than 8 percent. The board approves share purchases and the firm has an ownership guideline that outlines an accumulation phase, a maintenance phase and a gradual divestiture stage to limit concentration of control.

Graham described the ownership guideline as a way to encourage long-term stakes among employees and to prevent a small group from holding controlling power. He said the intent is to promote widespread ‘owner mentalities’ across the staff.

Gragnani joined Diversified Trust about eight years ago and serves as managing principal of the Atlanta office. He will remain in Atlanta after taking the CEO post to keep clear boundaries between his daily responsibilities and the mentorship role of the former leaders. Gragnani commented that having Graham and Bryan available provides guidance without pressure: ‘I don’t feel any negative pressure.’

The firm is also changing the president role. Brook Lester, managing principal for the Memphis office and chief wealth strategist, will succeed T. (Lee) Gibson as president when the leadership shifts.

Executives said the firm’s earlier transition, when Graham replaced Bryan as CEO, lacked a long planning window and produced overlapping responsibilities. The board added the five-year notice requirement to allow the company to identify internal candidates, assign increasing responsibilities over time, and consider external candidates if needed. Graham recalled that the prior change moved quickly and made it harder for a successor to define a distinct approach.

A newly completed strategic plan covers priorities for the next five years and is intended to give the incoming leadership a clear set of objectives. Gragnani said the plan provides a ‘runway’ for new management and helps staff and clients understand near-term priorities.

Founded in 1994, Diversified Trust grew from about $3.8 billion in assets a decade ago to roughly $15 billion today. Executives attribute part of the firm’s growth to the employee-ownership structure, which they use as a recruiting and retention tool by offering staff an opportunity to buy equity when the board approves.

Under the planned structure, former CEOs will keep involvement to preserve client relationships and institutional knowledge while stepping back from daily operational control. Graham indicated he plans to remain involved as an institutional memory and to mentor the next generation of leaders while allowing them to make decisions.