Management Turnover as Change Agent

Monday, June 2, 2008

Credit Crisis Inks Another Notch - Ken Thompson, CEO, Wachovia

Early in May (see previous blog) Wachovia's WB (NYSE) then CEO and Chairman Ken Thompson was forced to give up his chairmanship after the bank released dismal numbers.  The second shoe has now fallen.  Wachovia's board yesterday forced Thompson to resign his CEO post as well. According to David Mildenberg and Hugh Son of Bloomberg
... the board blamed him for losses that cost the lender more than half its market value in the past year. The stock fell as much as 4 percent.

Chairman Lanty Smith was appointed interim CEO, the Charlotte, North Carolina-based company said today in a statement that cited " a series of previously disclosed disappointments and setbacks'' for the change. Thompson quit at the board's request, the statement said.
Triangle Business Journal wrote in a story today in which the Jounal quoted Lanty Smith, the new interim CEO,
"no single precipitating event" - such as the disclosure of even wider losses - caused Thompson's ouster.

"... A series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and its performance," Smith, 65, said in a prepared statement. "The board believes new leadership will help to revitalize and re-energize Wachovia and enable it to realize its potential. We will move Wachovia steadily ahead as a strong, independent company by continuing to focus first on the needs of our customers."
Under the gun, banks have been fervently trying to split the CEO and Chairmanship positions to try and allay growing unhappiness by shareholders and activists.  We will just have to see if this will be enough for Wachovia's naysayers.  Stay tuned.

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