(Bloomberg News) Bank of New York Mellon Corp., beset by legal challenges and an underperforming stock, said Chairman and Chief Executive Officer Robert P. Kelly left after a dispute with directors over the way he ran the company.
Kelly, 57, who had led the world's biggest custody bank since 2007, left by "mutual agreement" with the board, the company said yesterday in a statement. His successor is Gerald L. Hassell, 59, who has been president of New York-based BNY Mellon since 1998.
The company's stock has tumbled 32 percent this year and trades at about the same level as in early 1997. Like other custody banks, it's struggled with low interest rates, which squeeze profits on lending cash and securities, and running money-market funds. BNY Mellon has been sued for allegedly overcharging pension funds on foreign-exchange trades and has been accused by New York's attorney general of violating state law in its role representing investors in mortgage securities.
"The stock price is the ultimate measure of a CEO's job, and the stock hasn't done well," Gerard Cassidy, an analyst at RBC Capital Markets in Portland, Maine, said in a telephone interview. Cassidy, who rates the stock "outperform," said Boston-based State Street Corp., whose stock is down 23 percent this year, has done a better job winning new business than BNY Mellon.
Kelly's departure, which surprised analysts, was announced after the close of regular U.S. trading. BNY Mellon fell 26 cents to $20.55 on electronic markets.
Directors Said Alienated
Jeep Bryant, a company spokesman, declined to comment beyond the statement, which didn't elaborate on the differences between Kelly and the board. BNY Mellon's outside directors include Wesley W. von Schack, chairman of Aegis Ltd; Michael Kowalski, CEO of New York-based Tiffany & Co.; John Surma Jr., head of Pittsburgh-based U.S. Steel Corp.; and Edmund Kelly, chairman of Boston-based Liberty Mutual Holdings Co.
The board believed the CEO alienated some directors and top executives by blaming some company problems on other members of senior management, the Wall Street Journal reported, citing people familiar with the matter. Kelly also was viewed by some as having become difficult to work with, and the board feared losing highly valued employees, the newspaper said.
Kelly was one of at least five industry executives who rebuffed overtures in 2009 from Bank of America Corp. to replace Kenneth D. Lewis as CEO at the largest U.S. lender. Kelly, the leading outside candidate, dropped out on Dec. 14 that year after the board offered a $20 million compensation package, a person familiar with the matter said at the time. The Charlotte, North Carolina-based company named an insider, Brian T. Moynihan, as its leader.