CEO Payday Draws S.C. Governor's Ire

South Carolina Gov. Mark Sanford has asked federal authorities to investigate a more than $12 million payday for a bank CEO in his state, ahead of the company's application for assistance through the government's bailout program.

Sanford, a Republican, penned a letter to Treasury Secretary Henry Paulson asking him to review the case of The South Financial Group ( TSFG) CEO Mack Whittle, who suddenly moved up the date of his retirement shortly after the bank announced it would seek federal funds under the Troubled Assets Relief Program, or TARP, passed by Congress last month. Banks agreeing to preferred equity investments from the program subject themselves to certain restrictions on executive compensation.

TheStreet.com on Oct. 29 called attention to Whittle's suspiciously-timed golden parachute, which was soon after picked up by local and national media.

"I applaud the fact that you have placed limitations on executive compensation for those receiving federal money, but you need to be aware of how those limitations are being circumvented," Sanford writes in his letter to Paulson, dated Nov. 7.

Whittle had originally planned to retire by the end of 2008, but that would have allowed bank regulators to review his generous pay package, which some reports put at as high as $18 million. In 2006, SNL Financial named Whittle one of America's most overcompensated bank executives.

John C.B. Smith, chairman of the South Financial's board of directors, said in a statement issued Tuesday morning that Whittle's retirement date was moved up after "the management transition has progressed."

"The terms of Mr. Whittle's retirement are consistent with the provisions of his employment agreement, which were disclosed to both the public and the banking regulators," Smith says in the statement. "The retirement reflected his 20-year career with TSFG as its founder and only chief executive officer. Moreover, TSFG did not have the right to unilaterally limit Mr. Whittle's rights embodied in his long-standing agreement with the company."

Nine of the nation's largest banks, including Bank of America ( BAC), JPMorgan Chase ( JPM), Citigroup ( C) and Wells Fargo ( WFC), agreed to an initial round of investments two weeks ago.

A host of regional banks, including PNC Financial Services ( PNC) and KeyCorp ( KEY), have disclosed investments this week. Banks have until Nov. 14 to apply and, if accepted, agree to join the program.

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