Pro Publica notes the remarkable tale of Mack Whittle, the former CEO of South Financial Group, a South Carolina bank.
Whittle founded South Financial back in 1986, and under his leadership it grew to be the largest bank in the state. It expanded into North Carolina and Florida, eventually boasting $13.7 billion in total assets and 180 branch offices.
But Florida was one of the hardest hit states when the housing market crashed, and South Financial suffered. In early 2007, the bank's stock was above $26. Today it's at about $3.50. In the third quarter this year, South Financial posted a $25 million net loss.
In early September, Whittle announced that he planned to retire by year's end. A few weeks later, the financial crisis struck, and Congress soon passed a $700 billion bailout bill for banks. South Financial quickly announced that it would apply for bailout money.
Then, in a federal regulatory filing dated October 28, the bank quietly announced that Whittle had in fact stepped down as CEO a day earlier. No reason was given, and Whittle's successor as CEO had not yet been named.
So, why the expedited schedule? Perhaps because Whittle's new leaving date meant that he wasn't subject to limits on executive pay that were imposed as a condition of the bailout. As a result, Whittle enjoyed an $18 million send off, which includes a $9 million pension benefit, and perks like a $133,920 auto allowance and $75,000 for "financial planning." (He'll need some!)
And -- proving you can have your cake and eat it too -- earlier this week, it was announced that South Financial will receive $347 million from U.S. taxpayers as part of the bailout program.
South Carolina governor Mark Sanford, a Republican, has suggested that Whittle may have been "gaming the system" by moving up his retirement date, and has called for a Treasury Department investigation.
The bank said in a statement that the hefty package "reflected [Whittle's] 20 year career with [South Financial Group] as its founder and only CEO."
One expert on executive compensation told Pro Publica: "The whole idea was to avoid these types of arrangements" The Treasury "doesn't want the companies receiving taxpayer funds, terminating executives and having them walk away with excessive golden parachutes."
In this case -- and perhaps in others yet to be revealed? -- it looks like Treasury may have fallen short, to say the least.
Late Update: Given that its South Carolina governor Mark Sanford who's calling on the Treasury Department to investigate Whittle, it's worth noting that -- according to the Columbia paper The State (via Nexis) -- in 2006, Whittle was at the forefront of a group of state business executives who were dissatisfied with Sanford's policies toward business as governor, and backed a potential primary challenger, former state commerce secretary Bob Royall. Royall ultimately decided not to run, but it seems likely that Whittle isn't at the top of Sanford's Christmas card list, to say the least.