Thompson Out at Wachovia

Posted by: Jena McGregor on June 2, 2008

Just weeks after Wachovia’s directors stripped the bank’s CEO, G. Kennedy Thompson, of his chairman duties, they’ve gone and taken the CEO job, too. This morning, Wachovia announced that Thompson is “retiring at the request of the board,” and will be replaced on an interim basis by new Chairman Lanty Smith. The first change happened just two weeks after Wachovia publicly defended Thompson’s performance; the company was careful to point out that Thompson still had the day-to-day job of managing the company.

As it turns out, that was just for a few more weeks. “No single precipitating event caused the board to reach this decision, but a series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and its performance,” Smith said in a press release.

Interestingly, the move occurs in contrast to a new version of a study out from Booz & Company (formerly part of Booz Allen Hamilton), the management consulting firm. The firm’s annual CEO turnover study, released last week, notes that CEOs are seldom dismissed for poor short-term results. “Counter to common perceptions,” the study’s press release noted, “the worst-performing CEOs actually faced a low probability of being forced from office in the short term.” Over the years studied (1995, 1998 and 2000 to 2007), Booz & Company found that the average rate of a CEO being removed from office for poor performance was only 2.1%.

The Booz & Company study points out a number of other interesting findings. Although the year has seen a number of banking chiefs shown the door, North American CEOs have the longest tenure. Stan O’Neal and Chuck Prince (the former CEOs of Merrill Lynch and Citigroup, respectively) may see things differently, but the overall rate of CEO turnover, which includes planned successions, dismissals, and merger-related departures, actually decreased slightly in 2007. And, the study discovered in an obvious finding, a CEO who is also chairman is more secure than one who is not. Half of all CEOs who were forced to leave their companies in 2007 never held the title of chairman. That compares to 26% who held the title at the start of their tenures.

Another bank CEO might want to take note of that finding. In other news today about financial chiefs, Washington Mutual’s CEO, Kerry Killinger, was also stripped of his role as chairman today. Will its board take away another title too?

Reader Comments

ThomasJefferson

June 2, 2008 2:33 PM

371 CEO's of big businesses have been "fired" so far this year 2008.
It's a MASS EXODUS! And it's going to get worse.

Get ready!
Goldman Sacks, JP Morgan, Chase, Citibank, Leeman Bros, and others had $516 TRILLION in derivatives trading out there that went NO BID. They had NO liquidity. So the Federal Reserve let them trade their derivatives for T-bills so they could have some kind of liquidity. So to service the interest of the debt... they transferred $14-trillion over to the national debt that nobodies talking about yet! So forget about the Federal Reserve bailing out Bears Stern for $30 billion for bad mortgage loans, it's MUCH worse than that! The national debt was $9-trillion, which was 1/3rd of the tax income... and now they've added $14-trillion to it, for $23-trillion total... and GOD KNOWS how much more by the end of the year. And they are doing this ASSUMING THE BANKS ARE GOING TO MAKE THE PAYMENTS WHEN THE BANKS AREN'T MAKING THE PAYMENTS NOW. That's why you see so many bank CEO's resigning. They know they're leading the country into bankruptcy if they don't figure out something soon.

The banks can't pay THEIR bills. With the mess they've made of our commerce, credit, and businesses economy, and the skyrocketing gas, food prices, loss of jobs etc... it's hard to imagine how we're supposed to pay our bills.

ThomasJefferson

June 2, 2008 2:34 PM

371 CEO's of big businesses have been "fired" so far this year 2008.
It's a MASS EXODUS! And it's going to get worse.

Get ready!
Goldman Sacks, JP Morgan, Chase, Citibank, Leeman Bros, and others had $516 TRILLION in derivatives trading out there that went NO BID. They had NO liquidity. So the Federal Reserve let them trade their derivatives for T-bills so they could have some kind of liquidity. So to service the interest of the debt... they transferred $14-trillion over to the national debt that nobodies talking about yet! So forget about the Federal Reserve bailing out Bears Stern for $30 billion for bad mortgage loans, it's MUCH worse than that! The national debt was $9-trillion, which was 1/3rd of the tax income... and now they've added $14-trillion to it, for $23-trillion total... and GOD KNOWS how much more by the end of the year. And they are doing this ASSUMING THE BANKS ARE GOING TO MAKE THE PAYMENTS WHEN THE BANKS AREN'T MAKING THE PAYMENTS NOW. That's why you see so many bank CEO's resigning. They know they're leading the country into bankruptcy if they don't figure out something soon.

The banks can't pay THEIR bills. With the mess they've made of our commerce, credit, and businesses economy, and the skyrocketing gas, food prices, loss of jobs etc... it's hard to imagine how we're supposed to pay our bills.

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