Robert P. Kelly, EVP and CFO of First Union, will serve as CFO when Charlotte, N.C.-based First Union Corp. and Winston-Salem, N.C- based Wachovia Corp. complete their merger.
A Wachovia spokesperson declined to comment on the reason for this choice, only to say that it was simply “part of the agreement.”
Kelly, 47, joined First Union only five months ago, succeeding Robert T. Atwood, who had served as CFO since 1991 and had planned to retire.
Before joining First Union, Kelly had worked at Toronto Dominion Bank in Canada where he held several senior management positions during a 19-year tenure. His last position at Toronto Dominion Bank was as vice chairman of the company’s group office.
Kelly holds a bachelor of commerce degree from St. Mary’s University in Halifax, Nova Scotia, and a masters degree in business administration from The City University in London, England.
Wachovia’s vice chairman and CFO Robert S. McCoy Jr., will head the merger integration team along with David M. Carroll, EVP of First Union.
Bringing with him over 23 years of experience at PricewaterhouseCoopers, McCoy had joined South Carolina National Corp. in 1984, serving as its president until the company merged with Wachovia in 1991. In September 1992, McCoy was named CFO of Wachovia. He was also elected vice chairman of the company in April of 1999.
In his last year as CFO, McCoy, 62, took home over $2.3 million in compensation. He received $630,000 in salary, $122,093 from a company retirement and savings plan, and $35,525 in other compensation, which included the value of disparate perks like supplemental life and disability insurance, tax return preparation and financial planning services, company-sponsored social clubs, company-provided automobiles and automobile and cost-of-living allowances. McCoy was also awarded $1.6 million in restricted stock awards, bringing his total compensation to $2,387,618.
There will also be several other management changes implemented when the merger is completed.
L.M. Baker Jr., chairman, president and CEO of Wachovia, will become chairman of the new organization.
G. Kennedy Thompson, chairman, president and CEO of First Union, will become president and CEO. Donald K. Truslow, Wachovia’s senior EVP and chief risk officer, will become chief risk management officer.
Benjamin P. Jenkins III, First Union’s current vice chairman, will be responsible for the new company’s general banking division.
The board of directors of the combined company will comprise 18 members, with nine coming from the Wachovia board and nine from the First Union board.
Terms of the agreement call for common stockholders of Wachovia to receive 2 shares of common stock of First Union in exchange for each share of Wachovia common stock. In addition, Wachovia’s board is expected to approve a special 48 cents per common share dividend payable prior to closing in the third quarter.
The companies expect the merger to generate $890 million in annual expense reductions, phased in over a three-year integration period. This equals eight percent of the companies’ current combined expense base.
The companies expect to take merger-related one-time charges of $1.45 billion, related to staff training, retention and severance; real estate; systems integration; and other miscellaneous accruals.
The companies added that they may need to divest approximately $1.5 billion to $2 billion in deposits as a condition of regulatory approval.
Over the three-year integration period, the combined staff will be reduced by approximately 7,000 positions. Close to half of this reduction is expected to be achieved through normal attrition.