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Mack Whittle

UPDATED -- Report: Treasury Looking Into Whittle Pay

Zachary Roth | November 21, 2008, 12:15PM

The Treasury Department is reviewing concerns relating to the $18 million compensation package received by Mack Whittle, the former CEO of South Financial bank, reports the Greenville News.

As we noted yesterday, Whittle moved up the date of his retirement, possibly so that his pay wouldn't be subject to restrictions on companies participating in the bailout program. Last week, South Financial received $347 million as part of that program.

A spokesman with the office of S.C. Rep. Bob Inglis told the Greenville News: "[Treasury is] examining the issue."

Inglis and South Carolina governor Mark Sanford -- who Whittle had in recent years opposed politically -- had asked Treasury to probe the matter. Both are Republicans.

In a letter to Treasury Secretary Henry Paulson, Inglis urged Paulson to close loopholes to prevent executives from gaming the system in the way that Whittle may have done.

As we reported yesterday, Whittle served on John McCain's South Carolina finance team, and raised money for George Bush in 2000.

Whittle, who has said he'll remain on South Financial's board, is also being sued by a company shareholder seeking to block the payment.

Late Update: In fact, the news that Treasury is looking into the Whittle matter was first reported yesterday afternoon by TheStreet.com. The financial news site was also first to raise questions about the timing of Whittle's departure back in October.

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Topics: Bailout, Mack Whittle, Treasury Department

Bailout

Suit Seeks To Block Whittle's Executive Pay

Zachary Roth | November 20, 2008, 2:43PM

Mack Whittle is being sued by a shareholder of South Financial, who is trying to block his $18 million compensation package.

The shareholder, Vernon Mercier, said the suit was prompted by last week's announcement that South Financial would receive bailout funds, reports a South Carolina TV station.

A judge declined Mercier's request for an injunction blocking the payment, but delayed a decision on a motion to dismiss the suit.

A lawyer for Whittle, Billy Wilkins, told the court: "Mack Whittle and his family have given a lot to this community and it's a tough time for him. Particularly to be ridiculed as he has been in the press and accused of things that he didn't do: getting a golden parachute, taking advantage of the taxpayers. All of that stuff is absolutely not true."

Wilkins continued: "[Whittle's] retirement benefits are based solely on an employment contract that had been in existence for over two years when he retired. He's getting nothing more or less than that what he is legally entitled to."

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Topics: Bailout, Mack Whittle, Treasury Department

Mack Whittle

Whittle Was On McCain's South Carolina Finance Team

Zachary Roth | November 20, 2008, 1:25PM

Mack Whittle was a member of John McCain's South Carolina finance team for the Arizona senator's recent presidential bid, and was on the finance committee for South Carolina senator (and McCain pal) Lindsey Graham's 2002 Senate campaign. Whittle also raised money for George Bush's run in 2000.

That's according to a press release sent out by McCain's campaign in March 2007, and reported by the States News Service (via Nexis). It lists 40 members of the finance team, including:

Mack Whittle of Greenville, CEO of the South Financial Group. Bush Fundraiser 2000. Graham for Senate Finance Committee 2002.

Whittle also serves on the board of the University of South Carolina, according to published reports.

And according to the transcript (via Nexis) of an October 22 conference call with reporters, Whittle will remain on South Financial's board. On the call, Whittle said: "I have a three-year term on the board, and I just plan on continuing to serve out that term."

Whittle retired late last moth with an $18 million severance package. South Financial recently received $347 million in bailout money.

Late Update: In 2003, Bush also appointed Whittle a member of the Advisory Committee on the Arts, says this White House press release.

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Topics: Bailout, George Bush, John McCain, Mack Whittle

Mack Whittle

Earlier Retirement Date Lets CEO Of Bailed-Out Bank Pocket $18 Million

Zachary Roth | November 20, 2008, 11:57AM

Pro Publica notes the remarkable tale of Mack Whittle, the former CEO of South Financial Group, a South Carolina bank.

Whittle founded South Financial back in 1986, and under his leadership it grew to be the largest bank in the state. It expanded into North Carolina and Florida, eventually boasting $13.7 billion in total assets and 180 branch offices.

But Florida was one of the hardest hit states when the housing market crashed, and South Financial suffered. In early 2007, the bank's stock was above $26. Today it's at about $3.50. In the third quarter this year, South Financial posted a $25 million net loss.

In early September, Whittle announced that he planned to retire by year's end. A few weeks later, the financial crisis struck, and Congress soon passed a $700 billion bailout bill for banks. South Financial quickly announced that it would apply for bailout money.

Then, in a federal regulatory filing dated October 28, the bank quietly announced that Whittle had in fact stepped down as CEO a day earlier. No reason was given, and Whittle's successor as CEO had not yet been named.

So, why the expedited schedule? Perhaps because Whittle's new leaving date meant that he wasn't subject to limits on executive pay that were imposed as a condition of the bailout. As a result, Whittle enjoyed an $18 million send off, which includes a $9 million pension benefit, and perks like a $133,920 auto allowance and $75,000 for "financial planning." (He'll need some!)

And -- proving you can have your cake and eat it too -- earlier this week, it was announced that South Financial will receive $347 million from U.S. taxpayers as part of the bailout program.

South Carolina governor Mark Sanford, a Republican, has suggested that Whittle may have been "gaming the system" by moving up his retirement date, and has called for a Treasury Department investigation.

The bank said in a statement that the hefty package "reflected [Whittle's] 20 year career with [South Financial Group] as its founder and only CEO."

One expert on executive compensation told Pro Publica: "The whole idea was to avoid these types of arrangements" The Treasury "doesn't want the companies receiving taxpayer funds, terminating executives and having them walk away with excessive golden parachutes."

In this case -- and perhaps in others yet to be revealed? -- it looks like Treasury may have fallen short, to say the least.

Late Update: Given that its South Carolina governor Mark Sanford who's calling on the Treasury Department to investigate Whittle, it's worth noting that -- according to the Columbia paper The State (via Nexis) -- in 2006, Whittle was at the forefront of a group of state business executives who were dissatisfied with Sanford's policies toward business as governor, and backed a potential primary challenger, former state commerce secretary Bob Royall. Royall ultimately decided not to run, but it seems likely that Whittle isn't at the top of Sanford's Christmas card list, to say the least.