Updated with latest share price, further background.
NEW YORK (
shares fell by as much as 5% on Monday after the online broker named its lead independent director Robert Druskin to serve as chairman and interim CEO, with investors seemingly put off by the fact that a permanent succession solution still has not been found.
Druskin, 62, will step into the role on Dec. 31, succeeding current chairman and CEO Don Layton, whose contract expires then. Layton has been at the helm of the troubled company for the last two years, guiding E*Trade through a major turnaround that included an injection of capital from
Citadel Investment Partners
as well as a large recapitalization this past summer.
E*Trade said it has made "meaningful progress" in the search for a permanent CEO, but Druskin is not a candidate to fill the CEO position. Layton will continue as a consultant in order to help with a smooth transition for Druskin and the new CEO.
Time was clearly running out for E*Trade to name a successor, similar to
Bank of America's
well-documented succession difficulties. E*Trade originally announced in September that Layton would not continue as chairman and CEO past the end of this year, and had provided little clarity on its efforts to find a replacement since then.
Druskin, a former COO of
, has served on E*Trade's board since February 2008. He has chaired the company's finance and risk oversight committee and served on E*Trade's nominating and governance committee while on the board.
E*Trade's board of directors and Druskin have "mutually agreed that E*Trade and its constituents will be best served with Bob
Druskin serving solely as chairman once a new CEO is secured," the E*Trade spokeswoman said in a follow up statement.
The spokeswoman declined to answer further questions from
regarding the CEO search.
Druskin is a longtime veteran of Citigroup and its predecessors. He joined Smith Barney, Citigroup's wealth management arm (a majority stake of which has since been sold to
) in 1991 as chief administrative officer. Druskin held a variety of executive positions at Citigroup in its asset management, technology and corporate banking divisions. But he departed at the end of 2007, soon after Vikram Pandit became Citigroup's CEO.
"I am very pleased to be expanding my role at E*Trade at a time when the company is seeing strong momentum in so many fundamental parts of its business, thanks in no small part to Don's tremendous efforts here during the last two years," Druskin said in a statement.
"Despite the difficult economic environment, the company's number of brokerage accounts is at an all-time high, with record year-to-date trading volumes; and the balance sheet is significantly stronger as a result of the company's recapitalization," he added. "We enter 2010 well positioned to take advantage of the growth opportunities ahead, and I am looking forward to helping drive that progress."
Speculation that E*Trade is preparing for a sale continued Monday. The
Wall Street Journal
said that the choice of an internal candidate rather than an external candidate may be an indication that E*Trade could be sold next year.
Rumors have abounded this year that E*Trade rival
could be interested in buying the firm.
E*Trade shares were most recently falling 3.7% to $1.72. The pullback follows a big run-up, however, in Friday's session when the stock jumped 11% on heavy volume of 93.6 million.
--Written by Laurie Kulikowski in New York.