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?
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