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Kennedy Thompson, former CEO of Wachovia Corporation, center, talks to reporters in a
2006 file photo (AP).
2006 file photo (AP).
Wachovia CEO Latest Casualty in Credit Crisis
June 02, 2008 04:48 PM
The fourth-largest bank in the United States forces CEO Kennedy Thompson into retirement after major losses in the past year.
30-Second Summary
The Charlotte, N.C.-based bank on Monday issued a statement, citing “a series of previously disclosed disappointments and setbacks” as the reason Thompson stepped down at the board’s request. The bank’s stock dropped 81 cents following the announcement.
Wachovia Chairman Lanty Smith was appointed interim CEO.
Thompson had already been stripped of his chairman title in April after shareholders—angry about the company’s first quarterly loss since 2001—demanded his removal at their annual meeting. Wachovia has lost more than half its market value in the past year, according to Bloomberg.
In separate banking news, Washington Mutual announced that Kerry Killinger will remain CEO but step down as chairman of the board following an 80 percent decline in market value over the last year. Stephen Frank, an independent director, will take over as chairman.
Reshuffling efforts are becoming the norm as the U.S. housing slump continues to take its toll.
Merrill Lynch’s longtime CEO Stan O’Neal resigned in October after unveiling the company’s worst-ever quarterly report. Citigroup’s Chief Executive Charles Prince met the same fate in November after the group’s third quarter earnings fell over 50 percent.
Do the reorganization attempts at major U.S. financial institutions work? Perhaps, says Deutsche Bank analyst Mike Mayo.
“At a minimum, we consider that a new CEO is the first step toward revitalizing the company and getting a fresh perspective on addressing its problems,” he said in a note to clients.
Wachovia Chairman Lanty Smith was appointed interim CEO.
Thompson had already been stripped of his chairman title in April after shareholders—angry about the company’s first quarterly loss since 2001—demanded his removal at their annual meeting. Wachovia has lost more than half its market value in the past year, according to Bloomberg.
In separate banking news, Washington Mutual announced that Kerry Killinger will remain CEO but step down as chairman of the board following an 80 percent decline in market value over the last year. Stephen Frank, an independent director, will take over as chairman.
Reshuffling efforts are becoming the norm as the U.S. housing slump continues to take its toll.
Merrill Lynch’s longtime CEO Stan O’Neal resigned in October after unveiling the company’s worst-ever quarterly report. Citigroup’s Chief Executive Charles Prince met the same fate in November after the group’s third quarter earnings fell over 50 percent.
Do the reorganization attempts at major U.S. financial institutions work? Perhaps, says Deutsche Bank analyst Mike Mayo.
“At a minimum, we consider that a new CEO is the first step toward revitalizing the company and getting a fresh perspective on addressing its problems,” he said in a note to clients.
Headline Links: Thompson and Killinger step down, Wachovia stock slides
Thompson spent 32 years at Wachovia, Bloomberg reports, heading its Florida and investment banking operations before becoming CEO. Analysts say Wachovia will most likely seek a new CEO from outside the bank, because there isn’t a clearly designated successor. In separate news, Killinger stepped down as chairman at Washington Mutual following 80-percent market losses.
Source: Bloomberg
Wachovia Corp. shares slid Monday morning following Thompson’s resignation, a move that “may hurt short-term profit, but help further down the road,” reports the Associated Press. The stock dropped 81 cents—3.4 percent—to $22.99.
Source: Forbes (Associated Press)
Background: Big banks hit big lows
In April, Merrill Lynch announced more than $6.5 billion in write-downs and plans to cut at least 2,900 jobs, to the dismay of shareholders. It was the latest piece of bad news for Merrill Lynch, which saw CEO Stan O’Neal resign in October.
Source: findingDulcinea
Citigroup Inc. Chief Executive Charles Prince offered to resign in November after the bank reported third-quarter losses of 57 percent.
Source: Forbes
In January, findingDulcinea explored how the sub-prime crisis isn’t affecting only borrowers with poor credit, but is hurting the country’s financial giants, which have lost billions, too.
Source: findingDulcinea
Opinion & Analysis: Wachovia’s announcement “refreshing”
Regarding Wachovia’s announcement, Zac Bissonnette writes on BloggingStocks that “there’s a lot to like about the way this ‘retirement’ was reported. Granted it didn’t use the dreaded f-word (fired), but the press release was remarkably candid, noting already in the first paragraph that the board had requested his departure.”
Source: BloggingStocks
In a blog post titled “Another CEO Gone,” New York Times financial correspondent Floyd Norris writes that the reasons for Thompson’s ouster were, at least, clear cut: “Give Wachovia’s board credit for honesty. The board fired Ken Thompson, who had been chief executive since 2001, and did not mince words in explaining why he was leaving.”
Source: The New York Times
Reference: Wachovia’s own words
Wachovia’s press release about Thompson, who is “retiring at the request of the Board,” according to the statement, is available on its Web site.
Source: Wachovia
© 2009 Dulcinea Media, Inc.
