Wachovia Ousts CEO After Dismal 2008 Start
Wachovia Corp. chief executive Ken Thompson was pushed out Monday as head of the nation's fourth-largest bank, becoming the latest financial services executive to be ousted amid turmoil in the U.S. housing market.
He joins Stanley O'Neal at Merrill Lynch & Co. and Charles Prince at Citigroup Inc., who both presided over huge losses from exposure to bad mortgages, and were subsequently forced out from their perches at the top of Wall Street institutions.
"It has been an honor to serve this great company for 32 years and to lead it for the past eight years," Thompson said in a statement issued by the bank. "Together we achieved great successes and overcame tough challenges."
The board of the Charlotte-based bank said it asked Thompson, 58, to retire and replaced him on an interim basis with Chairman Lanty Smith. Smith replaced Thompson as chairman last month in a move the bank said "strengthens independent leadership" at the company.
Smith said Monday "this was a step that was taken after very careful consideration," and one that was precipitated by no single event but rather a "series of previously disclosed setbacks."
"It's been our hope and expectation that Ken would serve for several more years," Smith said during a conference call with reporters. "We certainly wanted Ken to succeed. This is earlier than any of us wanted or choose."
The bank's shares fell 3.5 percent, or 81 cents, to $22.99 at the open of trade, following a broad descent in the European banking sector Monday.
Smith said there were no other senior management changes planned. A search for the next chief executive began immediately after Sunday's board meeting, he said.
The change at Wachovia comes after a dismal start to 2008 that followed a weak 2007.
Wachovia posted a $393 million first-quarter loss and a 41 percent cut to its dividend. The longtime bank executive's credibility was damaged further when he said the bank's roughly $25 billion purchase of home lender Golden West Financial Corp., a deal he made at the height of the nation's housing bubble in 2006, was on solid footing.
He later acknowledged the timing of the deal "was not the best," and Wachovia was forced to set aside $2.8 billion earlier this year to cover losses with problem loans. Meanwhile, Wachovia's share price has tumbled from its 52-week high of $54.95 to close Friday at $23.80.
The company's business lines - its general bank, wealth management, the corporate and investment bank and capital management - will report to Ben Jenkins. Currently the bank's vice chairman and president of its general bank, Jenkins will serve as Wachovia's interim chief operating officer.
Smith has been a director since 1987, a lead independent director since 2000, and served as chairman of Wachovia's executive committee. He is chairman and CEO of Tippet Capital, a merchant banking firm in Raleigh.