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Meet the New Boss - Same as the Old Boss
Carson re-enlists as People's CEO, insists bank is not for sale
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Business New Haven
11/30/1998
By: BNH
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People's Bank announced November 20 that its board of directors had voted to extend current CEO and Chairman David E.A. Carson's employment contract through the year 2000, and had appointed a transition committee to select Carson's successor. The bank said Carson has agreed to serve as CEO for the length of the term of his contract or until a successor is appointed.
Carson had been scheduled to retire as CEO of the bank in January and remain as chairman only.
James P. Biggs, the company's president and chief operating officer, was to assume the position of CEO at that time. But on October 22 Biggs unexpectedly resigned, citing personal reasons and a what he said was a clearer understanding of the different duties of the CEO.
Carson had steered the bank over more than a decade to its position as “the largest bank headquartered in Connecticut, based on managed assets.” In addition to People's strong asset base, it has diversified to provide commercial, consumer, insurance and investment services.
The bank has been cited for its innovative thrust into supermarket banking, getting a jump on larger banks and capturing an early lead, if not a dominant position, in supermarket banking in the state. The bank has 42 of its 126 branches located in Super Stop & Shop stores.
The bank also provides brokerage services and is the 24th-largest issuer of MasterCard and VISA credit cards in the country. It has an international credit-card operation headquartered in Northampton, England.
Concurrent with the Carson announcement, the bank let it be known that two stockholder proposals were being examined by the board. One asks for significant changes to the board of directors; the other proposes that the bank pursue a sale or merger.
According to a bank press release: “The first proposal was to alter the board structure to one with a single class of directors with a uniform term of office. People's expects the first proposal regarding board structure to be included in the 1999 proxy statement. The bank is studying the second proposal to determine whether it satisfies the requirements for inclusion in the 1999 proxy statement.”
People's Bank is organized under a mutual holding-company structure within which People's Mutual Holdings owns 57 percent of the bank's stock. The bank, founded in 1842, changed its status in 1988 by converting from a mutual savings bank to a publicly traded company with a mutual holding company structure to allow the bank to raise additional capital in the public markets.
On November 19 the bank announced, “People's Mutual Holdings' board of trustees reaffirmed its commitment to retain the mutual holding-company structure and its majority ownership position in the bank.” Carson added: “The mutual holding-company structure has served all of our stakeholders well since its inception. It has enabled us to grow our businesses, provide strong returns for our shareholders and serve our communities. We have no intention of selling or merging the bank.''
The shareholder requests may be the result of a recent drop in the company's stock value. On October 8, the per-share price had dropped to a low of $18.81 from an annual high of $41.5 reached last April. The bank's stock price had fallen along with most other regional and national banks as a result of the disruptions in world financial markets. As of November 20 People's stock price had recovered to $29.68.
The bank does appear to be taking steps to satisfy shareholders, however, including a ten-percent quarterly dividend increase to 23 cents per share announced on October 15, along with third-quarter results showing an earnings increase of 13 percent for the quarter and 17 percent for the nine-month period comparison.
The bank also announced on November 20 a stock buy-back plan to repurchase up to five percent, or 3.2 million shares, of the banks 64.1 million outstanding shares. Trustees of People's Mutual Holdings, which owns 36.5 million shares of People's Bank common stock, has voted not to sell any of its shares in the program.
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