Online trading and banking concern E*Trade is shaking up
the ranks of its board of directors with the appointment of four new
members, the departure of two standing members, and the creation of a
compensation committee to oversee executive pay packages.
The changes have been promised by the company’s new CEO Mitchell Caplan,
who vowed to Wall Street analysts in February that changes to
the company’s corporate governance structure were in the works, as part
of his efforts
to rebuild trust with investors.
Caplan was named as CEO in January after the company’s founder and CEO,
Christos Cotsakos, abruptly resigned amid controversial news that his pay
package for 2001 was $80 million, at a time when the company’s stock price
was falling along with revenues. Cotsakos later gave back about $21 million
the following May.
On Tuesday, in an effort to show that it is addressing investors’
criticism over the pay deal, the Menlo Park, Calif.-based online brokerage
said it has established a new audit committee for internal accounting
reviews, in addition to a the compensation committee for overseeing pay
packages.
The four board members appointed to serve as unaffiliated, independent outside
directors are: Vaughn A. Clarke, executive vice president of the
Federal Home Loan Mortgage Corporation; Michael Parks, currently managing
director of the leveraged finance group for the Trust Company of the West;
C. Cathleen Raffaeli, who is a managing partner, of The Hamilton White
Group, and Donna Weaver, chairman of Mx Secure.
All the new directors,
including the recently appointed CEO Mitchell H. Caplan, will stand for
election at E*Trade’s annual shareholder meeting, which is slated for May
22, 2003.
The two board members who are departing are William E. Ford, a board
member since 1995, who said he would resign as of April 23. Peter Chernin,
who has been a director since 1999, also said he would not seek re-election
at the May shareholder meeting but would serve on E*Trade’s advisory
committee until the fall of 2003.
In a statement about the four new board members, George Hayter, the non-
executive chairman of E*Trade Group, said one of his primary goals as
chairman was to evolve the board structure to best suit the needs of the
company “and to eliminate any shareholder concerns about corporate
governance. The four new Directors are recognized leaders that add
tremendous strength and diversity to our board,” he said.
Hayter became non-executive chairman in January when then-president and
COO Caplan stepped into the CEO slot.
