Berkshire Hills employees sent a secret letter weeks before CEO exit

An anonymous letter about a “toxic” workplace culture may have contributed to the departure of Michael Daly, who led Berkshire Hills Bancorp in Boston for 16 years before stepping down this week.

His resignation took analysts by surprise. Piper Jaffray analysts led by Matthew Breese said the resignation may have been precipitated by an anonymous letter last month describing the workplace as “toxic” and in dire need of change.

The letter was purportedly written by employees and was sent to “analysts, several bank insiders and several prominent members of the community,” Piper Jaffray said.

A spokeswoman for Berkshire Hills in a comment to Bloomberg News declined to elaborate on Daly’s departure, but said that workplace culture is one of the company’s top priorities, with employees as its “most valuable asset.”

Citing employee reviews of the company and leadership on Glassdoor.com, Piper Jaffray’s Breese wrote that he thought it unlikely that Daly’s departure was a coincidence and said it was likely related to the culture. “Just 25% of employees” would recommend Berkshire to a friend, below the 62% median within Piper’s coverage universe, Breese said. CEO approval was around 35%, compared to Piper’s 84% median.

The company’s shares fell as much as 2.4% Tuesday, among the worst performers in the Russell 2000 Banks: Savings, Thrift & Mortgage Lending Index. It was down 2.1% at $33.36 at 3:04 p.m. Tuesday in New York.

Breese rates the bank at the equivalent of a hold. The stock has one buy, five holds and no sells. The average price target suggests 13% upside to the shares over the next 12 months, according to data compiled by Bloomberg.

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