Tuesday, October 10, 2006


By the time I finish writing this post, another CEO may have been fired.

Despite the superhuman power we bloggers wield, these events are probably unconnected. According to various news reports, the board of Sovereign Bancorp, Inc. (SOV) might be meeting today, and if they do they might fire longtime CEO Jay Sidhu.

Sovereign is delightfully messy, governance-wise, which has made some shareholders a bit peevish. Its recent proxy statement is like a 19th century Russian novel, dense with explanations and digressions. Among the colorful minor characters are Independent Director/Lawn Boy Daniel Rothermel, Vice Chair of the Audit Committee, to whom Sovereign paid $4000 last year in a "landscape maintenance relationship," and Independent Director/Landlord Cameron Troilo, Sr., who got almost half a million in rent from the company in 2005.

So maybe it's technically true, as the proxy claims, that these payments aren’t "material" - especially the surprisingly affordable lawn care. But it's all so tacky.

According to Bloomberg, along with his moving boxes Sidhu could walk out with $13 million in severance unless the company wants to claim he was fired for "cause." Not bloody likely. Under his 1997 employment contract, "cause" means that Sidhu gets convicted of a crime, "willfully" refuses to do what the board directs even after they ask nicely (I call this one the Bartleby the Scrivener clause), a government agency tells the company to get rid of him, or he violates his noncompetition agreement. Simply doing a lousy job, naturally, doesn't affect the contents of his party favor bag.

OK, it’s 5 pm. No news on Sidhu. Hey, who left this Kryptonite shit on my desk?