Credit Crunch CEO Bloodletting Claimes Latest Victim: Wachovia's Ken Thompson

Just when you thought it was safe to go back in the water… Wachovia CEO Ken Thompson has been gobbled up in a subprime shark attack after 32 years with the company.

“The Board believes new leadership will help to revitalize and reenergize Wachovia and enable it to realize its potential,” said the excellently-named interim CEO Lanty Smith.

Ken will now join Citibank’s Charles Prince, and Merrill Lynch’s Stanley O’Neal at the failed CEO pool party.

From CNNMoney:

Wachovia’s woes, however, have only surfaced recently. In mid-April, the nation’s fourth-largest bank reported a surprising first-quarter loss of $350 million – hurt, in part, by its ill-timed 2006 acquisition of California mortgage lender Golden West Financial Corp.

Shortly thereafter, the company drew the ire of its shareholders by announcing plans to raise $7 billion in capital through a stock offering and to slash its quarterly dividend by 41%.

Thompson defended the actions at the time, saying the capital raising was done to gird the company’s balance sheet against a protracted downturn in the housing market.

The news only got worse last month when Wachovia restated its losses. The company said its losses were, in fact, closer to $708 million following a review of its life insurance portfolio.

Meanwhile, it looks like Kerry Killinger, WaMu’s CEO, is gonna need a bigger boat. The company said it would split the role of chairman and chief executive…which is exactly what Wachovia did to Thompson before dropping him.

Wachovia CEO out at board’s request
[CNNMoney](Thanks, Evan!)

Comments

Edit Your Comment

  1. boo hoo, Wachovia SUCKS.

  2. dragonfire81 says:

    yeah but the sad part is he still gets to walk away with millions. It’s not like they kicked him out the door with nothing.

  3. mattman0726 says:

    @dragonfire81: agreed. stupid “golden parachute” clauses.

  4. ViperBorg says:
  5. MPHinPgh says:

    @dragonfire81: yeah but the sad part is he still gets to walk away with millions. It’s not like they kicked him out the door with nothing.

    …And he’ll probably find ANOTHER lucrative job in fairly short order.

    I’d really prefer he go on a coke binge (thereby burning through all of his parachute-money), alienate his family and friends and have to live out the rest of his days homeless.

    (sorry…in a cranky mood today)

  6. Copernicus42 says:

    claimes?

  7. darksunfox says:

    I don’t know about the negativity towards Thompson personally. Reading the article, Thompson has been with the company for 32 years. This is a little more sad than when they fire the hired gun – this was a guy who dedicated what essentially was his entire professional life to one company. To wish ill on someone who came up the ranks over decades with the same company…

  8. Wormfather says:

    @mattman0726: Hey you want to hire the best talent, you’d better be prepared to pay out the best money. i.e. if I had CEO credentials and was walking into this heap of mess there’d deffinitly be a clause that says “This shit is fubar, if you want me to put my neck out there to fix this, I’m getting $250 mil in severence in case you boys get cold feet in the middle of this “transition period”.

    In other news, this dude was a hack, wachovia is better off.

  9. Wormfather says:

    @darksunfox: Actualy KT was an example of the Peter Principle.

  10. gqcarrick says:

    It’s funny all these banks and lending institutions are firing their CEO’s only because the corporate greed they like got them in hot water with the housing market meltdown.

  11. @Wormfather:

    A 32 year hack?

  12. ilovemom says:

    @mattman0726: Where does it say anything about a golden parachute? Not that I wouldn’t be surprised if there was one, but aren’t we jumping to conclusions here?

  13. ilovemom says:

    No pun intended. Really.

  14. ashabanapal says:

    actually, ken thompson is a very capable executive and a gentleman to boot. the biggest problem with wachovia is that they chose a very aggressive growth strategy at a very unfortunate time. it was an ego thing, they were a top-10 bank and wanted to break the top 3. the board sacrificed ken thompson for working toward their vision. they acquired several investment companies over the last 2-3 years. Some were good investments like the recent merger with ag edwards, others like golden west were less prudent. the relaxation of loan standards by mid-sized companies in order to inflate their portfolios and therefore their buyout price is a big part of what caused the mortgage mess. ken is not an innocent victim, but not a robber-baron either. the villains here are the dozens of mortgage companies that floated loans they new they would then sell to someone else, never caring if repayment of those loans would or could be achieved. they made their commissions, cooked the books, and then sold out, making more money every step of the way and then walked away from the mess.

  15. Snarkysnake says:

    ArrrrrrHHH !

    Sometimes even we scurvy pirates make our own walk the plank !

    Arrrrrhhhh !

  16. broke463 says:

    i’ve worked for wachovia for the past few years and had the opportunity to meet with ken on several occasions, most recently 2 weeks ago. neither he, nor any of us saw this coming (at least not so soon after his removal as chairman of the board).

    he’s honestly a stand up guy who was really well-liked, not only within the industry, but also by his employees. the general consensus is that everyone hates to see him go, but we all understand why he had to. he’s going to be missed.

    as far as what he walks away with:
    – $1.45 million, or 16 months’ base salary
    – $7.25 million in stock awards that were scheduled to vest with his retirement.

    it may sound like a lot, but it’s modest compared to most wall street execs.