Ex-Sovereign chief to land softly with $8.4M package
Boston Business Journal - by Tim McLaughlin and Craig M. Douglas
Joseph Campanelli stands to pocket at least $8.4 million from a golden parachute that rewards him with two years’ salary, bonus pay and an enhanced retirement plan, U.S. regulatory filings show.
The son of a Connecticut mailman who earned his way through college framing houses, Campanelli ran the bank for about two years. His last full day on the job was on one of the worst for both Wall Street and Sovereign investors. On that day, Sept. 29, Sovereign shares plunged 72 percent as investors dumped bank stocks in the wake of the collapse of Washington Mutual Inc., the biggest bank failure in U.S. history.
The next day, Sovereign announced that Vermont banking veteran Paul Perrault will take over as CEO to stabilize the troubled regional bank, marking a disappointing end to Campanelli’s career at the company.
The bank said Campanelli expects to pursue other family and business interests.
In addition to his potential exit pay package, Campanelli had deferred compensation, as of Dec. 31, of $559,243. He also owned 752,076 shares of Sovereign stock when the company’s proxy was filed About half of that stock is tied to options, however, and most likely are worthless, given Sovereign’s share price plunge in the last year.
As CEO, Campanelli’s base salary in 2007 was $826,923. He also received a $1.25 million stay-on bonus, which was not tied to performance. Last year, the company also paid $2,552 for Campanelli’s car allowance; $9,558 for a club membership; and $49,119 for home security, company filings show.
Campanelli, along with other senior executives, also got the benefit of a discount mortgage from the bank. The outstanding balance on the mortgage, as of Dec. 31, was $505,788. The interest rate given to executives was a 1 percent discount to market rates. The specific rate was not disclosed.
Kirk W. Walters, Sovereign’s executive vice president and CFO, will serve as interim president and CEO until Perrault joins the company. The bank, which recently raised $1.9 billion in capital, may need to raise more given some big-ticket investment losses.
But Sovereign said it has $12 billion in unused liquidity it could tap, including $6.2 billion from the Federal Home Loan Bank of Pittsburgh.
Nonetheless, Sovereign’s balance sheet has been hit by soured investments in Fannie Mae and Freddie Mac preferred stock, which is now considered nearly worthless. The investment was valued at more than $600 million before the government bailout of the two mortgage giants. The bank also took a hit on the sale of a $750 million portfolio of collateralized debt.
Campanelli, hired as the company’s CEO in late 2006 after several years serving as the bank’s New England head, replaced Sovereign’s embattled longtime chief, Jay Sidhu.
Among Campanelli’s first moves was to consolidate Sovereign’s decision making in Boston. The bank, which is officially headquartered outside of Philadelphia, has for roughly two years housed most of its senior executives in Boston’s Financial District.
However, operating expenses at Sovereign jumped more than 11 percent over the first six months of this year while net interest income — a key earnings metric that measures the difference between what banks pay to borrow money and earn on loans — fell 15 percent to $721 million. That drop included $267 million in provisions for credit losses.
Losses tied to recent missteps, including attempts to broaden Sovereign’s auto lending outside of its core markets, were compounded by the past year’s financial markets meltdown.
Investors have taken note, driving down the price of the Sovereign’s stock from roughly $18 a share a year ago to an Oct. 1 close of $4.82 a share.
Campanelli joined the bank in 1997 after it acquired FleetBoston Financial’s auto lending group.
Related Industry News |
Latest News |
Most Viewed Stories |
Most Emailed Stories |
