Perks of thrift mergers cause concern


February 11, 1994|By David Conn | David Conn,Sun Staff Writer

Are the officers and directors of America's mutual savings and loans greedily enriching themselves at the expense of their depositors?

That's the assumption behind heightened regulatory interest in the conversion of mutual thrifts to stock institutions. Mutual thrifts technically are owned by their depositors, while stock companies are owned by the shareholders.

At the end of January the Treasury Department and the Office of Thrift Supervision (OTS) declared a moratorium on mutual thrifts trying both to convert to stock-owned and to merge. The OTS also said it plans to look at "standard conversions," those that don't involve a merger, and the Federal Deposit Insurance Corp. is looking at executive compensation at thrifts converting from mutual to stock.

When thrifts both convert and merge with acquiring companies, the executives of the converting thrift often are given generous compensation and retirement packages while the depositors may end up with little or nothing.

And even when thrifts simply go public, the officers and directors tend to reserve large chunks of the stock for themselves. SNL Securities of Charlottesville, Va., looked at 16 conversions in December and January and found that insiders awarded themselves free stock or discounts worth 13 percent of the value of all the stock sold.

The real issue, according to Alexandria, Va., banking consultant Bert Ely, is exactly who owns a mutual thrift? And more importantly, how does that ownership get divvied up when a mutual company converts to stock?

There are four possible owners, as Mr. Ely sees it: the depositors, the management, the government, or the community the thrift serves, which is Mr. Ely's favored solution, at least for some thrifts.

One way to bestow ownership of a thrift on its community would be to set up a nonprofit foundation that would own the stock and use its value to fund generally beneficial projects.

Of course, different solutions might apply to different thrifts, and no one in Washington seems to want to touch this sticky subject, Mr. Ely says.

"You're going from kind of a communist or socialist situation to a capitalist one, which is the same problem the former Soviet Union is going through."

Elisabeth Spector joins Legg Mason

She was the investment banker who first took Legg Mason Inc. public in 1984, she worked on Legg's various debt offerings and acquisitions over the years, and now Elisabeth Spector has become a part of the team.

The former Merrill Lynch & Co. investment banker joined Legg Mason last month as senior vice president for strategic planning. Ms. Spector, 46, will help Chairman Raymond A. Mason evaluate and implement future acquisitions.

Her first job will be a "detailed study of Legg Mason . . . and our position in the securities industry."

Ms. Spector, a Washington, D.C., native, and a graduate of Smith College and Harvard Business School, spent the last four years at the Resolution Trust Corp., managing the disposition of failed thrifts and the securities they held. "I was called the 'junk bond queen.' " Now working for one of her former clients, Ms. Spector said, "I'm both old and new."

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