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Former Wachovia chief executive Ken Thompson has joined a New York investment firm as a senior adviser, setting the stage for a second act in a financial services career tarnished by the Charlotte bank's near collapse and sale last year to Wells Fargo.
A year ago next Tuesday, Wachovia made the stunning announcement that its board had ousted Thompson amid rising losses from his Golden West Financial acquisition and other missteps. Less than four months later, as the financial crisis deepened, successor Bob Steel agreed to sell Wachovia to San Francisco-based Wells.
Thompson, 58, on Wednesday confirmed he's working at private-equity firm Aquiline Capital Partners but declined to comment further. He has been with the firm a couple of months, spending time in New York and Charlotte.
With a $1.1 billion fund raised in 2007, Aquiline invests in banking, insurance, asset management and other financial services-related companies. Private-equity firms aim to make a return by improving operations and cutting costs at the companies in which they invest.
Aquiline's chief executive is Jeffrey Greenberg, the former CEO of insurance brokerage Marsh & McLennan Cos. He founded the firm in 2005 after resigning amid then-New York Attorney General Eliot Spitzer's bid-rigging suit against Marsh.
A spokesman for Aquiline confirmed Thompson's position but declined further comment.
Thompson, a Rocky Mount native and UNC Chapel Hill alumnus, was a well-liked executive who joined First Union in 1976 and rose to the top spot in 2000, succeeding mentor Ed Crutchfield. He built a reputation for forging successful mergers before buying nontraditional mortgage lender Golden West at the height of the housing boom in 2006. He became the target of shareholder ire after worries about losses and Wachovia's financial outlook walloped the bank's stock price.
The Wachovia board stripped his chairmanship in May 2008 and then forced him to retire weeks later, with then-chairman Lanty Smith citing a series of miscues. Smith and the board later faced criticism for ousting Thompson without a successor in place and presiding over the sale of a longtime N.C. institution.
Smith, reached at his Raleigh home this week, would say only, “I think it's best to be glad things came out as well as they did and go on to the future.”
Since leaving Wachovia, Thompson has remained in Charlotte, keeping a relatively low profile while continuing to serve on a handful of nonprofit and corporate boards. He chairs the Foundation for the Carolinas board, serves on the Carolinas HealthCare System board, is an independent director on the PGA Tour's policy board and was re-elected as a director at technology giant Hewlett-Packard Co. in March.
He stepped down as a director of the nonprofit that runs the Quail Hollow Championship (formerly the Wachovia Championship) golf tournament after losing his CEO post. He didn't attend this year's tournament.
Under his retirement agreement, Thompson for two years cannot serve as a director, officer, employee or consultant at a company that competes against Wachovia in the former states it served. But he is not prohibited from working at a hedge fund or private-equity firm as long as he doesn't hold a position similar to a senior officer of a financial services institution. For three years, he can't recruit employees from Wachovia.
In his departure, Thompson received $1.4 million in severance and up to $50,000 for legal fees. As part of his retirement agreement, he also has use of a small office near uptown and a secretary, a Wells Fargo spokeswoman confirmed.
His restricted stock holdings vested upon retirement and were initially worth $7.2 million. But those shares, if Thompson held onto them, are now worth much less, like those owned by other former Wachovia stockholders. In the Wells deal, Wachovia shareholders received one-fifth of a Wells Fargo share for each Wachovia share. At Wednesday's closing price of $24.08, that means Thompson's restricted shares would be worth about $1.5 million. His stock options remain worthless.
While he will always be remembered for the disastrous Golden West deal, Thompson's reputation may actually be improving as other companies falter in the financial crisis and the recession, said a Thompson friend, a local business executive who didn't want his name used so he could speak more candidly.
In particular, some wonder if Wachovia's demise could have been avoided if the bank had raised more capital after Thompson left, a move now being forced on some financial institutions by regulators, the friend noted.
Thompson can be a valuable asset to a private-equity firm because of a Rolodex stuffed with contacts around the Southeast and his experience running a large bank, the friend said. “There's a lot of interest in Ken,” he said. “(Potential employers) know he wants to do something to offset partially what's been done at Wachovia.”
Wachovia's tumultuous year
May 2008: CEO Ken Thompson stripped of his chairman title.
June 2, 2008: Wachovia announces Thompson is ousted as CEO after eight years at the helm.
July 2008: Wachovia board hires Treasury official Bob Steel as CEO.
September 2008: With the bank near collapse, FDIC announces Citigroup will buy most of Wachovia.
October 2008: Wells Fargo trumps Citi deal.
Dec. 31, 2008: Wells closes purchase of Wachovia.
February: Duke Energy assumes name of former Wachovia headquarters under construction uptown.
April: Wells said it made $2.38 billion first-quarter profit, reversing a fourth-quarter loss.
May: Wells discloses 548 uptown Charlotte layoffs as part of merger.
