WINSTON-SALEM, N.C. - Before becoming Wachovia Corp.'s president and chief operating officer in April 1999, G. Joseph Prendergast sat down with chairman and chief executive officer L.M. "Bud" Baker Jr. to work out management transition and succession issues.
That transition is now well under way. Wachovia announced Monday that Mr. Prendergast, 55, would retire Jan. 1. It also announced that Stanhope A. Kelly, the 42-year-old head of its banking division, would take on the added responsibility of running asset and wealth management services.
Mr. Kelly is considered a potential successor to Mr. Baker, 58.
Wachovia is keeping the president's post open, perhaps saving it to designate an heir once one is apparent. But some who watch the company had already noticed Mr. Kelly taking on a more public role.
Mr. Kelly is "definitely an important part of the team," said Marni Pont O'Doherty, an analyst at Keefe, Bruyette & Woods.
Plans have been announced for several senior Wachovia executives to retire early next year. Mr. Prendergast said the process is at least partly driven by a desire to groom a new generation of leadership within the bank.
When he took on his current posts, he said, he discussed with Mr. Baker appropriate "windows" for the younger management team to take on expanded roles and for him to leave.
"This was a good opportunity, in terms of key things that I was working on being wrapped up, and also for the development of the individuals" rising through the ranks of senior management, he said in an interview Monday. "There was some seasoning our people needed."
The retirement announcements also followed some rough quarters during which the bank lowered its profit forecast for the year, said nonperforming assets had increased, and announced an upcoming pretax charge of $100 million related to elimination of 1,800 positions.
But analysts said the changes appeared to have more to do with Wachovia's tradition of grooming new leaders. "Wachovia has a long history of smooth management succession, and I don't think they need to show us anything," said Ms. O'Doherty.
Mr. Prendergast, a 28-year veteran of the bank, led consumer banking and corporate lending as a senior executive vice president before becoming president and chief operating officer. He eventually moved to Winston-Salem, one of the company's two headquarters and the city where Mr. Baker is based.
Mr. Prendergast's departure will increase Mr. Kelly's responsibilities and those of Jean E. Davis, chief technology and operations officer. Like Mr. Kelly, Ms. Davis is taking on some business lines that have been under Mr. Prendergast's control.
Ms. Davis, 44, will take over e-business and the retail financial services unit, and will continue to report directly to Mr. Baker. Also, John C. McLean Jr., the executive in charge of Wachovia Corporate Financial Services and another of Mr. Prendergast's direct reports, will now report directly to Mr. Baker.
Other recent retirement moves were in different parts of the bank.
Mickey Dry, Wachovia's chief credit officer and senior executive in charge of loan administration, announced in July that he would retire Jan. 31. The departure of Mr. Dry, 60, will make room for Donald K. Truslow, 42, to succeed him in the newly created role of chief risk officer.
Likewise, Walter E. Leonard's retirement this past February as head of Wachovia Operational Services opened up the position for Ms. Davis.
These managers reporting to Mr. Baker "all took on a tremendous amount of line responsibility," said Mr. Prendergast. "All are in their 40's, are extremely capable and from an internal standpoint, our folks have been prepared for this," he said.
Asset and wealth management - a division that is considered a key driver for Wachovia's future earnings growth - remains headed by Robert G. Kniejski, who will report to Mr. Kelly.
"They need to gather additional assets and further penetrate their existing customer base" with their asset and wealth management products, said Christopher Marinac, an analyst with Robinson-Humphrey Co., a subsidiary of Citigroup Inc.'s Salomon Smith Barney.
Still, any succession to the top is a ways off. Last December, Mr. Baker signed another contract, ending in 2004, with the $70.8 billion-asset firm.
Mr. Prendergast said he was never in the running to succeed Mr. Baker. "The day Bud was named chief executive officer, I knew that - given my age -we were going to work as a team," he said.
Mr. Prendergast started his career at Wachovia in international banking, joining the company's New York offices in 1973. In 1977, still in international banking, he moved to Winston-Salem. He later spent 10 years in Atlanta with Wachovia corporate and consumer banking.
Also prompting the timing of his retirement announcement: the near completion of one of the projects under his control since becoming president, the resource realignment project. He said that he will be looking at various options, including business employment, as he settles into retirement, but expects that he and his wife - a former Coca-Cola Inc. executive - "will eventually migrate back to Atlanta."
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