When the credit crisis escalated last summer, a slew of bank chiefs were ousted, notably Citigoup Inc.'s Chuck Prince and Merrill Lynch & Co.'s Stan O'Neal. Bear Stearns Cos. chief Jimmy Cayne was "reduced" to serving as chairman, before Bear itself was washed away in the liquidity crisis. Others, such as Countrywide Financial Corp.'s Angelo Mozzilo, will probably slip into retirement after their institutions get sold, in this case to Bank of America Corp.
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But the drumbeat of kill-the-CEOs continues. The latest to join the chorus: former Wall Street analyst-turned-blogger Henry Blodget, who is calling for the ouster of Ken Thompson, CEO of Wachovia Corp., which just took a massive write-down prompting a dividend cut and an infusion of capital. (Why the Silicon Alley Insider is drifting into banking is a question for another day, although Blodget seems to think the issue is so obvious that anyone could offer it up. Nothing like a convert to accountability.)
Blodget mentions a handful of other banks -- including Washington Mutual Inc. and National City Corp. -- that are also in trouble, but he doesn't target their CEOs directly. The fact is, the likely sale of Nat City -- the latest talk centers around Bank of Nova Scotia -- will probably mean the departure of CEO Peter Paskind. As for WaMu, its recent equity infusion has critics calling for CEO Kerry Killinger's head over the massive dilution of the deal -- not to mention reports that he passed on an offer from Wall Street's current darling, J.P. Morgan Chase & Co.'s Jamie Dimon.
One group that might like to see Killinger ousted is activist investor CtW Investment Group, a pension advisory firm for the Change to Win labor group. Not only has CtW attempted to oust CEOs, including a failed campaign against Morgan Stanley's John Mack, but it has also focused attention on board members as well. Its most recent push is at WaMu where it is seeking the removal of directors Mary Pugh and James Stever, who deserve particular blame for WaMu's troubles, CtW argues, because they headed the directors' committee directly charged with overseeing risk. Proxy advisory services Glass, Lewis & Co. LLC and RiskMetrics Group/Institutional Shareholder Services have joined with CtW's WaMu position. (WaMu's annual meeting takes place after the stock market closes Tuesday.)
CtW's track record is very mixed; while Mack survived, Countrywide board member Henry Cisneros didn't. But given the continuing crisis, CtW, not to say armchair activists like Blodget, will continue to have plenty of targets. And wait till they discover retail. - Matthew Wurtzel
See story from Silicon Alley Insider
See related story about CtW's WaMu campaign from Dealscape
See related story about J.P. Morgan offer for WaMu from Dealscape
See related story about Bank of Nova Scotia from the National Post
See related story about Wachovia from Corporate Dealmaker
See related story about CEO pay from TheDeal.com
See related story about Countrywide deal from TheDeal.com
See Dealwatch: Banks, write-downs and the CEO shuffle
Comments
What are the chances that Blodget is shorting Wachovia.........
probably better than the chances that he knows how to read a balance sheet