In a swift and stunning move, People”™s United Financial Inc. is replacing CEO Philip Sherringham, despite his stewarding the bank through a punishing recession in relatively stable shape compared to some of its Northeast peers.
Bridgeport-based People”™s United did not immediately specify a reason for Sherringham”™s departure or name a permanent successor. The company”™s Chief Administrative Officer Jack Barnes leads the bank for now as interim CEO, one of four directors and executives who will make strategic decisions possibly to include acquisitions.
In a conference call with investors last week, Chairman George Carter assured investors that there was no single catalyst that precipitated the change. He added that “absolutely” no surprises would emerge related to the departure of Sherringham, though Carter hinted the move came as a surprise to senior executives.
“We have been talking about this amongst the board for a few weeks,” Carter said. “It was not a distraction to the board; it was not a distraction to management for sure.”
Barnes came to the company via its 2009 acquisition of Chittenden Corp., and manages operations, information technology, and business and real estate services. Early in his career, he spent five years in the Boston office of the Federal Deposit Insurance Corp.
In appointing Barnes interim CEO, People”™s United bypassed the company”™s Chief Financial Officer Paul Burner for the role, whose previous experience included serving as CFO of Citibank North America, at the time a $120 billion business.
Barnes and Burner both made $1.4 million last year.
For his part, Sherringham made $4 million in actual and estimated compensation last year, and holds nearly 1.1 million shares of People”™s United stock valued at more than $17 million. Under his employment contract, if People”™s United terminates Sherringham without cause, he is entitled to immediate vesting of shares that have yet to do so, save those awarded as retention incentives; and he could be in line for a parachute cash payment of as much as $4.5 million.
“We will be living up to the conditions in his contract,” Carter said.
The company”™s board hired New York City-based Russell Reynolds Associates to conduct a search for a permanent CEO, and indicated it will evaluate both internal and external candidates.
“Anyone on the inside is welcome to put their hat in the ring, and Jack has put his in already,” Carter said.
In his first conference call with investment analysts as interim CEO, Barnes repeatedly steered questions back to the safety of his prepared remarks that praised People”™s United employees and pledged to deploy the company”™s capital responsibly.
In his own conference calls with investors over the past few years, Sherringham was at times blunt with analysts but displayed the confidence to share meaningful information beyond what was written in a press release or earnings report.
Sherringham was originally hired in 2003 as CFO of People”™s United, and replaced John Klein as CEO in 2008 after Klein succumbed to cancer, with Sherringham having had no previous experience as a CEO.
Under Sherringham, People”™s United acquired Vermont-based Chittenden Corp., giving it several new subsidiaries in Massachusetts and northern New England. He also oversaw the company”™s expansion into Westchester County, N.Y., and last week acquired Lowell, Mass.-based Butler Bank, a failed institution with four branches that was under FDIC supervision.
In the past year, People”™s United has been scouting additional acquisition opportunities in the Northeast and nationally. While some analysts have suggested the company missed opportunities to pick up companies last spring and summer when bank stocks reached their nadir, Sherringham said last month that striking a deal had been difficult with banks reluctant to sell when their value had ebbed so low.
Carter suggested the company will press ahead with a significant acquisition soon, and vowed People”™s United was not for sale itself. Barnes said the company will remain open to acquiring a company no matter its geographic location in the U.S.
