Money world

CHARLOTTE, N.C.–Wachovia Corp. chief executive Ken Thompson was pushed out yesterday as head of America’s fourth-largest bank, becoming the latest financial services executive to be ousted amid turmoil in the U.S. housing market.

Thompson joins Stanley O’Neal, late of Merrill Lynch & Co., and Charles Prince, of Citigroup Inc., who both presided over huge losses from exposure to bad mortgages, and subsequently were forced from their perches at the top of Wall Street institutions.

Also yesterday, Seattle-based Washington Mutual Inc. stripped Kerry Killinger of his chair title, although he remains chief executive officer at the largest U.S. savings and loan.

Thompson’s dismissal comes after several withering months of criticism from shareholders.

Wachovia, based in Charlotte, N.C., said last month it lost $707 million (U.S.) in the first quarter, nearly doubling losses it reported earlier. When the bank announced it would cut dividends, it was Thompson, having promised earlier that that would not happen, who became the target of shareholder anger.

Thompson will not receive any incentive pay for fiscal 2008 but, according to a Securities and Exchange Commission filing, he will get severance of $1.45 million and accelerated vesting of $7.25 million in restricted stock.

"A lot of that is in place before these announcements come," said Sandler O’Neill & Partners LP analyst Kevin Fitzsimmons cash advance. “Unfortunately, it’s standard fare."

Wachovia shares closed in New York yesterday down 40 cents to $23.40, recovering from a tumble to near 13-year lows at $22.72 in early trading, after a broad descent in the European banking sector.

The board said it asked Thompson, 58, to retire and replaced him, on an interim basis, with chair Lanty Smith last month.

"It has been an honour to serve this great company for 32 years and to lead it for the past eight years," Thompson said in a statement issued by the bank. Smith said yesterday this was a step precipitated by no single event but rather a "series of previously disclosed setbacks."

"It’s been our hope and expectation that Ken would serve for several more years," Smith said in a conference call with reporters. "We certainly wanted Ken to succeed."

Smith said no other senior management changes were planned. A search for the next CEO began right after the board met Sunday, he said.

Wachovia was forced to set aside $2.8 billion to cover losses from problem loans.

Source