By Tim McLaughlin
BOSTON Nov 20 State Street Corp on Tuesday said
its long-time chief financial officer Ed Resch plans to retire
next year, just months after a report said the custody bank's
largest investors wanted to oust him or Chief Executive Jay
Boston-based State Street said 60-year-old Resch had
informed the bank that he plans to retire in 2013 after more
than a decade in his role as CFO. The move isn't related to any
investor discontent, State Street spokesman Carolyn Cichon said.
"Ed has been our CFO during one of the most challenging
times for our industry," Hooley said in a press release. "The
timing of his retirement will enable a thorough transition
process to his successor."
Last month the Financial Times said four of State Street's
10 largest shareholders are frustrated with the company's stock
price and pace of cost cutting. The FT said some of the
investors, which were not named, wanted either Hooley or Resch
to be replaced with "new blood".
After the FT report, Hooley told Reuters that most
shareholders like what he is doing and have confidence in State
Street's long-term prospects.
Compensation and expense management have been bones of
contention among some shareholders, namely Nelson Peltz, founder
and chief executive of Trian Fund Management LP in New York.
Trian is State Street's eighth-largest investor, owning 2
percent of the company's stock, according to Thomson Reuters
About a year ago, Trian released a critique of State
Street's operations, faulting the company for paying too much
for acquisitions and not keeping a lid on expenses. The report
said compensation costs increased dramatically while earnings
per share declined.
Last week Resch told investors and analysts that weak
foreign exchange revenue would hurt the custody bank's chances
of lowering its high ratio of compensation expenses.
State Street's goal is to keep the compensation ratio at
about 39 percent of revenue, compared with 40 percent in 2011.
That goal could be hard to meet as foreign currency trading
revenue withers from slack volume and volatility while key
customers shift away from FX transactions with higher profit