Banking

Wachovia went after its ‘first and only' choice

In recent years, Wachovia Corp. employees have packed the atrium in the company's headquarters complex to celebrate the bank's latest customer service accolade. On Thursday morning, they gathered for something weightier: the debut of a new chief executive charged with nothing less than saving the company.

Following a medley of pop music, including U2's “Beautiful Day,” chairman Lanty Smith introduced newly tapped CEO Bob Steel to a roar of applause. Leaning on the Wachovia-branded lectern, the former Wall Street banker and U.S. Treasury Department official peered into the crowd, absorbing the moment.

“This is pretty intimidating,” Steel said, earning his first laugh in the new post. “What a way to start your first day at work.”

Besides serving as a dollop of optimism in gloomy times, Steel's unveiling was the culmination of an intense six-week search that, in Smith's words, landed a dream candidate with big-time banking experience, Washington connections and N.C. ties. The inaugural appearance also launched Steel's daunting mission to wind down burgeoning loan losses, cut costs and restore credibility with downtrodden investors.

Smith took command of a search for a new CEO after he and the board ousted Ken Thompson, a company lifer felled by a series of missteps.

Smith became interim CEO and the company hired recruiting firm Spencer Stuart to help.

Early in the hunt, it was “only natural” to think of Steel, Smith said. He had known him for more than 15 years, respecting his intellect and leadership while serving together on Duke University's board of trustees. He called former Wachovia CEO John Medlin and others for their opinions. Steel was also at the top of Medlin's list.

The search committee wanted someone with strong risk-management skills and who would be a cultural fit, Smith said, and Steel soon became the “first and only” choice. Still, Smith knew it would be a “long shot” to lure Steel from his Treasury post, where he worked with a longtime Goldman Sachs colleague, Treasury Secretary Henry Paulson.

“Bob did not pursue this job,” Smith said. “We pursued Bob.”

The panel developed a short list of potential candidates. Smith didn't disclose names, but former Bank of America Corp. chief financial officer Al de Molina is believed to have been among them. As the search lingered, pressure mounted amid a steady decline in Wachovia's stock.

It's unclear when the initial contact with Steel was made. Steel said he had been busy in his Treasury job, planning to stay on until inauguration day in January. He rejected an early overture from Wachovia because he wanted to stay in his post, according to a person familiar with the matter. But Steel said in the “last few weeks” he started considering the opening.

The timing has raised questions about a possible conflict of interest if Steel talked to Wachovia about a job at the time he was monitoring the banking industry. Steel said he properly recused himself. Treasury spokeswoman Jennifer Zuccarelli said that, when Steel's discussions got serious in late June, he removed himself from meetings and issues involving Wachovia and consulted with department attorneys.

As he weighed the move, Steel said he talked with a circle of colleagues, including Paulson, and family members. He said his wife, Gillian, had always backed his “wacky career decisions,” which sent him overseas and to Washington, and was on board. He called his new position an exciting “professional and personal opportunity,” and cited Wachovia's history and reputation in the state and the industry.

Steel said talks heated up in the past week or 10 days, and buzz began building this week that Wachovia was close to naming a candidate. The board approved the hire unanimously on Wednesday. Steel said he called Thompson, telling him it was an honor to succeed him.

Wachovia issued a news release announcing the hire around 6:15 p.m. Later in the evening, Steel dined with Wachovia's top executives at the bank's headquarters building.

Chief Risk officer Don Truslow said Thursday the hire has been well received. “Bob comes with an unbelievably great reputation and set of skills,” he said.

The new CEO's first day started with conference calls with analysts and reporters eager to hear more about the bank's financial condition. For the most part, he demurred on details but promised the bank will be forthcoming when it discloses earnings July 22.

At the employee gathering, Steel was greeted by an audience that leaked outside onto the plaza that borders South Tryon Street. Some had heard of him before; others had not. His selection seemed to get good reviews and bring a sense of relief.

Steel's remarks went smoothly, except for a brief slip when he called Smith “Larry” instead of Lanty. He quickly apologized for the mistake.

In the conference call with analysts, Steel said the benchmark to judge him is the bank's stock price. The restricted stock awards he's receiving require the bank's shares to make significant improvement to cash in. He also needs to stay on the job for three years to receive the full benefit.

Asked how long he plans to stay, he said that's up to board chairman Smith. “I now have two bosses – my wife and Mr. Smith,” he said. “I'll follow orders from both like I usually do.” Staff writers Melissa Caron, Stella M. Hopkins and Christina Rexrode contributed.

In recent years, Wachovia Corp. employees have packed the atrium in the company's headquarters complex to celebrate the bank's latest customer service accolade. On Thursday morning, they gathered for something weightier: the debut of a new chief executive charged with nothing less than saving the company.

Following a medley of pop music, including U2's “Beautiful Day,” chairman Lanty Smith introduced newly tapped CEO Bob Steel to a roar of applause. Leaning on the Wachovia-branded lectern, the former Wall Street banker and U.S. Treasury Department official peered into the crowd, absorbing the moment.

“This is pretty intimidating,” Steel said, earning his first laugh in the new post. “What a way to start your first day at work.”

Besides serving as a dollop of optimism in gloomy times, Steel's unveiling was the culmination of an intense six-week search that, in Smith's words, landed a dream candidate with big-time banking experience, Washington connections and N.C. ties. The inaugural appearance also launched Steel's daunting mission to wind down burgeoning loan losses, cut costs and restore credibility with downtrodden investors.

Smith took command of a search for a new CEO after he and the board ousted Ken Thompson, a company lifer felled by a series of missteps.

Smith became interim CEO and the company hired recruiting firm Spencer Stuart to help.

Early in the hunt, it was “only natural” to think of Steel, Smith said. He had known him for more than 15 years, respecting his intellect and leadership while serving together on Duke University's board of trustees. He called former Wachovia CEO John Medlin and others for their opinions. Steel was also at the top of Medlin's list.

The search committee wanted someone with strong risk-management skills and who would be a cultural fit, Smith said, and Steel soon became the “first and only” choice. Still, Smith knew it would be a “long shot” to lure Steel from his Treasury post, where he worked with a longtime Goldman Sachs colleague, Treasury Secretary Henry Paulson.

“Bob did not pursue this job,” Smith said. “We pursued Bob.”

The panel developed a short list of potential candidates. Smith didn't disclose names, but former Bank of America Corp. chief financial officer Al de Molina is believed to have been among them. As the search lingered, pressure mounted amid a steady decline in Wachovia's stock.

It's unclear when the initial contact with Steel was made. Steel said he had been busy in his Treasury job, planning to stay on until inauguration day in January. He rejected an early overture from Wachovia because he wanted to stay in his post, according to a person familiar with the matter. But Steel said in the “last few weeks” he started considering the opening.

The timing has raised questions about a possible conflict of interest if Steel talked to Wachovia about a job at the time he was monitoring the banking industry. Steel said he properly recused himself. Treasury spokeswoman Jennifer Zuccarelli said that, when Steel's discussions got serious in late June, he removed himself from meetings and issues involving Wachovia and consulted with department attorneys.

As he weighed the move, Steel said he talked with a circle of colleagues, including Paulson, and family members. He said his wife, Gillian, had always backed his “wacky career decisions,” which sent him overseas and to Washington, and was on board. He called his new position an exciting “professional and personal opportunity,” and cited Wachovia's history and reputation in the state and the industry.

Steel said talks heated up in the past week or 10 days, and buzz began building this week that Wachovia was close to naming a candidate. The board approved the hire unanimously on Wednesday. Steel said he called Thompson, telling him it was an honor to succeed him.

Wachovia issued a news release announcing the hire around 6:15 p.m. Later in the evening, Steel dined with Wachovia's top executives at the bank's headquarters building.

Chief Risk officer Don Truslow said Thursday the hire has been well received. “Bob comes with an unbelievably great reputation and set of skills,” he said.

The new CEO's first day started with conference calls with analysts and reporters eager to hear more about the bank's financial condition. For the most part, he demurred on details but promised the bank will be forthcoming when it discloses earnings July 22.

At the employee gathering, Steel was greeted by an audience that leaked outside onto the plaza that borders South Tryon Street. Some had heard of him before; others had not. His selection seemed to get good reviews and bring a sense of relief.

Steel's remarks went smoothly, except for a brief slip when he called Smith “Larry” instead of Lanty. He quickly apologized for the mistake.

In the conference call with analysts, Steel said the benchmark to judge him is the bank's stock price. The restricted stock awards he's receiving require the bank's shares to make significant improvement to cash in. He also needs to stay on the job for three years to receive the full benefit.

Asked how long he plans to stay, he said that's up to board chairman Smith. “I now have two bosses – my wife and Mr. Smith,” he said. “I'll follow orders from both like I usually do.” Staff writers Melissa Caron, Stella M. Hopkins and Christina Rexrode contributed.

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