In surprise move, president of Bank of America resigns
Ex-Fleet executive wants greater leadership role; to get $25m in severance
Bank of America's new president, Eugene M. McQuade, resigned yesterday, stunning colleagues who had expected him to remain one of the highest-ranking former FleetBoston Financial Corp. employees in the combined bank.
He will take with him more than $25 million in severance, including a $2 million bonus for his work from April to June of this year, the bank disclosed in a regulatory filing.
McQuade held the number two spot, under chief executive Kenneth D. Lewis, and served on the board of directors. But Bank of America's true engines of growth -- consumer and commercial banking, which generate about 70 percent of the revenue -- did not fall under his leadership.
Instead, McQuade found himself responsible for more obscure yet troublesome areas of the bank, including technology and operations and Latin America, which were considered crucial to the success of the merger. McQuade was expected to gain influence as he navigated those operations successfully.
Yesterday, McQuade said he had not been happy with his focus on operations and wanted an "executive role." He said he resigned voluntarily and had not been asked to leave.
"I didn't want to wait a few years to gain power," he said. "I was ready for a bigger challenge than the opportunity was at Bank of America. I liked the leadership role I played at Fleet. I think I'd like another leadership role."
Bank of America has a rocky history with executives leaving during mergers. Many did not adjust to the ambitious and powerful group of executives who run the bank from its headquarters in Charlotte, N.C. "They stick together," Richard Bove, an analyst at Hoefer & Arnett, said of the Charlotte executives. "They're a unified group. No one's breaking into that culture."
When the Charlotte bank, then called NationsBank, took over BankAmerica Corp. of San Francisco in 1998, its chief executive, David Coulter, resigned less than a month after the merger closed. Many other executives followed, casting a pall over the merger that still has not disappeared.
But Bank of America executives said McQuade's resignation is different and does not foreshadow a mass exodus of ex-Fleet employees.
"No ifs, ands, and buts, Gene McQuade resigned. He wasn't asked to leave," said Chad Gifford, Bank of America's chairman. "I don't think this is indicative of the kind of situation in San Francisco."
Several former Fleet executives still hold high positions in Bank of America. Brian Moynihan is president of the bank's wealth management business; H. Jay Sarles is vice chairman; and Bradford Warner is president of Bank of America's premier and small business banking. Gifford said the bank views all as "important members" of the leadership team.
But McQuade's exit prompted speculation about whether Gifford will resign, as well. "I'd expect to see Chad Gifford leave in a year or so," said Bove, the analyst.
Gifford, Fleet's former chief executive, is slated to be Bank of America's chairman for two years; he also serves as chairman of the Bank of America Foundation. He said yesterday that he has no plans to depart early.
McQuade is among the most respected of the former Fleet employees. As Gifford's number two man, he played a major role in a reorganization that turned the bank around after several years of dismal financial results. He also was one of the chief architects of the merger agreement with Bank of America.
The appointment of McQuade as president added to the deal's credibility on Wall Street, where McQuade is well regarded. But McQuade began to chafe in his new role, colleagues said, as he found himself with considerably less influence than he had wielded at Fleet. During that time, Bank of America also moved James Hance from chief financial officer but kept him in the role of vice chairman. McQuade and Hance had spent hours together negotiating the Bank of America-Fleet merger and had become close.
Still, there are signs the bank did not expect him to leave. McQuade signed a year's lease on an apartment in Charlotte and moved into an office. After the deal closed, he spent about four days a week there.
Several colleagues speculated that McQuade may find himself as chief executive of another bank within a year.
"Someone of Gene's caliber will land on his feet," said James E. Moynihan Jr., a bank stock specialist with Advest Inc.
McQuade's $25 million in severance comes from two agreements. As Fleet's number two man, he had negotiated a severance package worth $12.5 million, including 48,000 shares of stock. When he became Bank of America's president on April 1, he signed an employment agreement that gives him a $2 million bonus plus another $10.5 million, double his base salary and bonus. His resignation is effective June 30. "I think what I enjoy was creating shareholder value, and I didn't think I'd have the opportunity to do that," he said.
Executives said the merger is on track. "The integration is going well," said Anne Finucane, Northeast president.
Sasha Talcott can be reached at stalcott@globe.com. 