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Sallie Mae CEO Albert Lord gets the %$#$% out of the chairman's role

Posted Jan 8th 2008 3:45PM by Zac Bissonnette (RSS feed)
Filed under: Deals, Management, Competitive Strategy, Private Equity, SLM Corp (SLM)

Having recently returned to the CEO's role in the wake of a failed leveraged buyout, Sallie Mae (NYSE: SLM) Chairman and CEO Albert Lord will give up the chairman's.

According (subscription required) to the Wall Street Journal, "Anthony P. Terracciano, 68 years old, with a history of finding capital for troubled companies -- and a reputation for helping to sell them -- will serve as chairman of SLM, also known as Sallie Mae, as he seeks to bolster its credit rating and investor confidence."

Additionally, former executive Jack Remondi is returning to the company as vice chairman and CFO.

Part of the reason for Lord's departure from the Chairman's role may be his exceptionally poor handling of a recent conference call that culminated in his rejoicing that they could "get the (expletive) outta here" because there were no more questions.

But questions still surround Mr. Lord. Why was he so eager to sell the company? Was he aware of troubles on the horizon and sought to dump the mess on someone else?

Investor perception of the company would probably strengthen considerable if Mr. Lord left entirely. But for now, separating the chairman and CEO jobs is always a good move for corporate governance.

Investors liked the news, sending the stock up more than 8%.

Yet more bad news for Sallie Mae (SLM)

Posted Dec 21st 2007 1:33PM by Michael Rainey (RSS feed)
Filed under: Bad News, SLM Corp (SLM)

I didn't think the news could get worse for SLM Corp. (NYSE: SLM), the parent of student loan giant Sallie Mae. As we noted on BloggingStocks earlier today, CEO Albert Lord put on a bizarre performance during a conference call on Wednesday, cursing and telling bad, violence-tinged jokes while providing no substantial information to analysts. This morning, TheStreet.com called Lord's "stunning performance" one of the five dumbest things on Wall Street this week, as it helped send the stock down 10% on the day.

But that's not the only bad news for SLM today. The New York Times is reporting that Sallie Mae now faces a $1 billion loss related to its falling stock price. Seems that SLM was making bets on its own stock price, entering into "equity forward contracts" that require it to buy its shares at set prices in the future. That was all fine and well as long its stock was rising -- which it did for years, from $10 a share in 2000 to $57 just this past July. But since then, the stock is down over 50%, which makes those forward contracts a money losing proposition.

According to The Times, SLM was facing a payment this week of $1.95 billion for stock worth only $909 million. Yesterday, it managed to delay that purchase by two months. But that hardly solves the problem. SLM has forward contracts in place to buy 44 million of its own shares, at an average price of roughly $44. Some of the contracts do not take effect for years -- unless the share price falls too far. When the share price reaches the $19.58 to $24.75 range, banks can demand immediate payment. Yesterday, the stock closed at $20.53.

So it looks like Sallie Mae is going to need to find a lot of money in a hurry. The deal it made yesterday removed some of the repayment triggers, but also moved the contracts forward to a February termination. That means that SLM needs to raise billions of dollars in two months. I hope Mr. Lord has the phone numbers of some deep-pocketed Chinese investors.

Sallie Mae CEO: 'Let's get the $%$% outta here!'

Posted Dec 21st 2007 11:31AM by Zac Bissonnette (RSS feed)
Filed under: Management, SLM Corp (SLM)

Sallie Mae (NYSE: SLM)'s earnings conference call went a little off-kilter. Reminiscent of former Enron CEO Jeff Skilling's "a**hole" comment, the Washington Post tells the story. After a bad quarter that sent the stock plummeting, CEO Albert Lord offered few details of his plans for the company on the conference call.

William Kavaler, a managing director of the French bank Societe Generale: "We're trying to figure out what your stock is going to be worth, and you've got to give us some guidance, you've got to give us some numbers."

Lord: "You should give Steve (head of investor relations) a call."

Kavaler: "But you're the CEO. You're the guy who just took over the company."

Lord: "Yeah ... that's exactly right. I'm the CEO. You should give Steve a call. Next question."

Continue reading Sallie Mae CEO: 'Let's get the $%$% outta here!'

Sallie Mae down 10% on lack of guidance -- and CEO's wacky conference call

Posted Dec 21st 2007 10:13AM by Michael Rainey (RSS feed)
Filed under: Bad News, SLM Corp (SLM)

Thursday, Sallie Mae -- known more formally as SLM Corp. (NYSE: SLM) -- lost $2.36 a share, closing at $20.53. The cause of this dramatic loss, over 10% on the day, was the failure of the firm's new CEO, Albert Lord, to reassure analysts that he is in control of Sallie Mae and has a plan for turning things around. In fact, during an analyst conference call on Wednesday, Lord was downright bizarre, refusing to provide any income projections and, worse, making bad jokes and cursing audibly.

Yesterday wasn't the first bad day for Sallie Mae, not by a long shot. In the last few weeks, news about Sallie Mae has been universally bad. In October, the private equity firm J. C. Flowers lowered the value of its buyout offer by 20%. The ensuing struggle over the buyout, as well as changes in federal law that may make students loans less profitable, helped send the stock down from the $50 range to the $30s. And it's been all downhill ever since.

In Wednesday's conference call, Lord repeatedly refused to answer analyst questions about 2008, despite the fact that SLM lowered guidance last week. He invited analysts to a meeting in New York next month, saying that they should "get there early because I can assure you, you will be going through a metal detector." Then, to make matters worse, at the end of the call he was heard to say, "There's no questions, let's get the [expletive] out of here."

With leadership like that, it looks like Sallie Mae has a long way to go before investors feel secure enough to jump back in.

[Update: There have been more developments this morning, which I will elaborate on soon enough.]