(RTTNews) - Separating the roles of chairman and chief executive officer, Washington Mutual
(WM) or WaMu, a consumer and small business banking company, Monday revealed the appointment of independent director Stephen Frank as chairman of board, effective July 1. WaMu added that Kerry Killinger would continue to lead the company as Chief Executive Officer and serve as a director.
Hurt by the subprime collapse and the resultant credit crisis, WaMu said in April that it was mulling splitting of the roles of chairman and chief executive officer. The savings & loan's stock plummeted 79% in the last year. WaMu lost over $1.14 billion or $1.40 per share in the first quarter after setting aside $3.511 billion to cover bad loans. After the loss, Killinger secured a $7 billion capital infusion into the company from a group led by TPG Inc.
Infuriated by the mortgage losses and two dividend cuts, shareholders have been demanding management changes, including the removal of Killinger, to bring the bank back to profitability. The company said Monday that the latest changes reflect 'the Board's commitment to listening to feedback from our shareholders'.
Sixty-six-year-old Frank is the retired chairman, president and CEO of utility company Southern California Edison. He has served on WaMu's Board of Directors since 1997, most recently as the S&P 500 component's Lead Independent Director.
While adopting a majority voting standard, the Seattle, Washington-based company's board also made several changes to the composition and leadership of certain of its Board Committees. Under the company's new majority voting standard, in uncontested director elections, nominees must receive a majority of votes cast to be re-elected.
The board also named Orin Smith, retired CEO of Starbucks, as the Chair of the Finance Committee. Thomas Leppert, Dallas Mayor and former chairman and CEO of The Turner Corp., has been appointed as Chair of the Governance Committee. Regina Montoya will serve as Chair of the Corporate Relations committee. The company also revealed that it has begun a search for new independent directors.
Commenting on the changes, Frank said: 'The actions taken today by the Board are the result of a deliberate review of how best to enhance WaMu's corporate governance policies and practices.'
Wachovia Corp.
(WB), the fourth-largest U.S. bank, last month split the posts of its CEO and chairman. Interestingly, Wachovia on Monday said the company's board requested its CEO Ken Thompson to retire. Lanty Smith, who replaced Thompson as chairman, will serve as interim CEO of Wachovia. Thompson, who led the company since April 2000, joins the league of Charles Prince of Citigroup Inc.
(C) and Stanley O'Neal of Merrill Lynch & Co.
(MER) who lost their offices, assuming responsibility for the company's poor performance.
The credit crisis still continues with concerns that more write-downs are on the anvil. Monday, Merrill Lynch reduced its rating on at least 27 U.S. stocks, including that of Lehman Brothers Holdings Inc.
(LEH), the fourth-largest U.S. securities firm, to 'Underperform'. The downgrade was based on speculation that the company might write down more assets. The brokerage also expressed doubt over Lehman's ability to remain profitable in the near-term.
On the same concern of further write-downs, Standard & Poor's Ratings Services Monday lowered its counterparty credit ratings on several companies. Morgan Stanley
(MS) was cut to 'A+/A-1' from 'AA-/A-1+', while Merrill Lynch was lowered to 'A/A-1' from 'A+/A-1'. According to S&P, 'The downgrade primarily reflects our concern that the pace and extent of earnings improvement could be considerably more muted than we previously anticipated.'
WM is currently trading at $8.92, down $0.10 or 1.11%, on 13.46 million shares. For the past 12 months, the stock trended in the range of $8.72-$44.60.
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