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Sovereign Bancorp CEO faces possible ouster at meeting next week

Sovereign Bancorp CEO faces possible ouster at meeting next week

The embattled chief executive of Sovereign Bancorp may be in a fight for his job and a board meeting next week could decide his fate.
Seven out of 12 Sovereign directors will meet Tuesday to decide whether to oust CEO Jay Sidhu and reconfigure the leadership of the board, according to a person familiar with the matter who spoke on condition of anonymity. The person is aware of the board's plans, but not authorized to disclose internal discussions.
Investors cheered the news, which was reported by The Wall Street Journal on Friday. Sovereign shares rose 11.6 percent, or $2.50, to close at a new 52-week high of $24.10 on the New York Stock Exchange.
Sidhu has been under fire from major shareholders for engineering the sale of nearly 25 percent of Sovereign to Banco Santander Central Hispano S.A. in Madrid. Santander initially purchased 19.8 percent of the Philadelphia-based thrift for $2.4 billion (euro1.9 billion) in June and bought up the rest in the open market.
The deal was crafted in a way that bypassed shareholder approval and consolidated power in friendly hands. Major shareholders had been upset at the dilution in their voting rights.
On Friday, Santander spokesman Peter Greiff confirmed that there would be a meeting on Tuesday.
The Wall Street Journal, citing one of the people familiar with the matter, reported that the seven directors are displeased that Sidhu has not improved the bank's performance and that its share prices has languished.
The company's shares improved steadily from Sept. 2001 to late 2003, but have been trading in a range of about $20 to $25 in the nearly three years since.
Santander also named Gonzalo de las Heras, an executive vice president and head of its New York office, to be on Sovereign's board. Santander will have appointed three directors.
The board will expand to 13, adding one more seat that is expected to be solidly on Sidhu's side.
Previously, Sovereign named to its board Ralph Whitworth, principal of Relational Investors LLC of San Diego. Relational is a major shareholder and has led the fight against the Santander deal, which culminated in several lawsuits.
In March, Relational and Sovereign agreed to drop the lawsuits and other activities after Sovereign agreed to name Whitworth and another independent director, to the board. Relational agreed to vote its shares to elect incumbent directors at the shareholders meeting.


Updated : 2021-04-20 22:50 GMT+08:00