Wachovia CEO retires following $708M loss

Wachovia CEO retires following $708M loss Sacramento Business Journal - by Charlotte Business Journal Print Article Email Article Reprints RSS Feeds Ken Thompson has retired as chief executive officer of WachoviaCorp. at the request of the bank's board. The board named chairman Lanty Smith as interim CEO on Monday.Also, company veteran Ben Jenkins, who is president of the generalbank, has been named Wachovia's interim chief operating officer. Wachovia has 176 branches in California, including 148 acquiredthrough its 2006 purchase of Golden West Financial Corp., theparent of World Saving Bank. The bank continues to expand itspresence in the Sacramento region. In a news release, the Charlotte-based bank (NYSE:WB) said thecompany's staff functions will report to Smith, who became chairmanlast month after Wachovia separated the roles of chairman and CEO.Wachovia's four lines of business -- the general bank, wealthmanagement, corporate and investment banking, and capitalmanagement -- will report to Jenkins. The board has formed a committee to search for a permanent CEO. According to a filing with the Securities and Exchange Commissionoutlining Thompson's retirement package, he will receive severanceequal to 16 months of his base salary, or $1.45 million. Thepackage also includes accelerated vesting of his outstanding stock awards. Based on Wachovia's $23.80 closing price on Friday, thevalue of the 304,469 unvested restricted stock awards that vestedupon his retirement is also $7.25 million. Thompson is also eligible for pension benefits, deferredcompensation and reimbursement of up to $50,000 for legal expensesincurred in negotiating the agreement. Thompson's retirement was effective Sunday. He had held both thechairman and CEO posts at the bank since 2000. "Wachovia is a strong institution and well positioned even inthe face of the unprecedented conditions in the financial servicesindustry," Smith, 65, said in a prepared statement. "Theboard is confident that we are putting in place the right interimleadership to move the company forward, and no other seniormanagement changes are currently contemplated." "No single precipitating event caused the board to reach thisdecision, but a series of previously disclosed disappointments andsetbacks cumulatively have negatively impacted the company and itsperformance," he said. "The board believes new leadershipwill help to revitalize and reenergize Wachovia and enable it torealize its potential. We will move Wachovia steadily ahead as astrong, independent company by continuing to focus first on theneeds of our customers." Smith is chairman and CEO of Tippet Capital, a merchant-bankingfirm based in Raleigh, N.C. He also is chairman of PrecisionFabrics Group Inc., a Greensboro-based manufacturer ofhigh-technology textile products. He has been a Wachovia directorsince 1987 and lead independent director since 2000. According toan SEC filing, Wachovia will grant Smith a quarterly restrictedstock award valued at $560,000, use of corporate aircraft and aleased apartment or reimbursed lodging costs for the duration ofhis interim role as CEO. News of Thompson's retirement follows increased losses at the thebank. In early May, Wachovia raised its first-quarter net loss 80percent from the total the company had reported three weeksearlier, citing a $315 million writedown on three contracts in itslife-insurance portfolio. According to a filing with the SEC,Wachovia now reports a net loss of $708 million, or 36 cents pershare, for the latest quarter. On April 14, the company said it hadlost $393 million, or 20 cents per share, in the quarter. In thesame period last year, Wachovia earned $2.3 billion, or $1.20 pershare. The bank also recently cut its dividend to 37.5 cents per sharefrom 64 cents per share while raising $8 billion in new common andpreferred stock, which diluted the value of existing shareholders'stock. Wachovia's stock has traded between $23.13 and $54.95 per shareover the last year.