Less than a month after losing his chairman post, Ken Thompson is out as Wachovia's chief executive officer as the Charlotte, N. C., bank wrestles with mounting...
Less than a month after losing his chairman post, Ken Thompson is out as Wachovia’s chief executive officer as the Charlotte, N.C., bank wrestles with mounting losses from its troubled Golden West Financial acquisition and ongoing investor unrest.
Wachovia said Monday that Thompson, 57, had retired at the board’s request, ending more than a three-decade career at the nation’s No. 4 bank by assets.
The board appointed Chairman Lanty Smith as interim CEO. Ben Jenkins, vice chairman and general bank president, will be interim chief operating officer.
The board has formed a special committee to search for a permanent CEO. In a conference call with reporters, Smith said the internal and external candidates would be considered. He gave no time frame for hiring but said the search would be done with “alacrity.”
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Analysts, surprised by the timing of the announcement, said it raised questions about the possibility of more bad news from the company or a potential takeover.
Smith, however, said there were no negative announcements forthcoming and that the company would move ahead as a “strong, independent company.”
Thompson will receive $1.45 million, or 16 months’ base salary, in severance, according to a securities filing Monday. He’ll also get $7.25 million in stock awards that were scheduled to vest with his retirement.
Analyst Nancy Bush of NAB Research said she hoped the move signaled the company’s willingness to make major changes in its mortgage business, which has struggled in the aftermath of the 2006 Golden West deal. “I’m hoping this means they’re going to take a major whack at the mortgage company,” she said.
Smith gave little detail about how Thompson’s hold on the post he had held since 2000 unraveled. The board asked him to resign a few days ago and acted Sunday to put interim leaders in place, Smith said.
“There is no single precipitating event here,” he said. “It’s simply a series of previously disclosed disappointments and setbacks.”
Smith said the move was designed to “re-energize” and “revitalize” the bank, while at the same time he emphasized the strength of the company’s businesses and balance sheet.
Smith said the company has a succession plan but had expected Thompson to serve much longer. The company is not in a “crisis situation” and can take the time to find the best replacement, Smith said, adding he expects strong outside interest in the job.
Thompson had faced calls to resign at the annual shareholder meeting in April, after a first-quarter loss and a prolonged plunge in Wachovia’s stock price. He had been beset recently by more missteps, including new losses from an insurance portfolio and a $144 million settlement over bank ties to telemarketers.
But his biggest merger — the $24 billion acquisition of mortgage specialist Golden West — proved his biggest mistake. The high-priced deal gave the company exposure to troubled housing markets in California and led to billions in loan losses that continue to build.
Smith would not provide an outlook for second-quarter earnings but said Wachovia would continue to be impacted by loan losses, like its rivals.
Thompson handled his departure “professionally,” but Smith provided no details. He praised Thompson’s integrity, loyalty and dedication.
In a statement, Thompson said it had been an honor to lead the company. “Together we achieved great successes and overcame tough challenges,” he said. “I have complete confidence in the ability of 120,000 Wachovia employees to continue to take this company forward, and I want to thank them for their dedication and commitment to Wachovia.”
Wachovia is one of Charlotte’s largest employers, with more than 20,000 workers there.
Charlotte Observer reporter Christina Rexrode contributed to this story.