The Winston-Salem Journal’s Richard Craver takes a look at the root of Wachovia’s problems, which in turn raises questions about then-CEO Bud Baker’s sweet deal after the First Union sale:
Baker denied in 2001 that he and the bank were pushed into selling, but skeptics of First Union and the deal say that Baker has never provided a compelling answer to why Wachovia pursued a buyer, particularly when other former management officials said they felt that the bank was strong enough “to stiff-arm” any hostile offer.
The deal raised questions, the skeptics said, because Wachovia shareholders got such a small premium for their stock and were asked to trade their shares for those of a company that has disappointed investors in recent years.
“So why First Union?” said Joseph Gordon of Gordon Asset Management LLC, an investment-advisory company in Durham.
“It’s easy. They made Baker an offer he couldn’t refuse. They didn’t even need to watch Godfather reruns to do it. They simply tore up his severance package, doubled it, added a few more perks, and presto.”
Baker has strongly denied, at the time of the First Union deal and yesterday, that he was influenced by personal gain.
Baker got a $1.5 million annual retirement package for life from the merged bank. He turned down a proposed $500,000 increase in his retirement compensation after accusations by some shareholders that the deal with First Union was partly motivated by a more attractive pension package.
Baker says “If it makes people feel better to have someone to blame, blame me.”
