In the end, it would seem that the bottom line at Bear Stearns Cos. for James Cayne was the bottom line.
The investment bank’s leader went through public relations hell in November when The Wall Street Journal reported that he had spent a lot of time playing either golf or bridge in July while his company was struggling with losses in its sub-prime mortgage funds.
On top of that, the Journal reported that Cayne smoked marijuana after one specific day of bridge. Cayne said he didn’t do this, though he would not answer general questions about marijuana use.
Media interest in Cayne’s conduct died down, but the problems at his firm continued, and it would appear that Cayne is now among those investment CEOs who have lost their jobs because of investment losses.
Both the Journal and The New York Times reported today that Cayne will resign as CEO at Bear Stearns while retaining his position as chairman of the board. Alan D. Schwartz, the Bear Stearns president, will succeed Cayne, the papers reported.
As of yesterday, the company’s stock was at $76.25, down almost $100 from its high of $172.61 of last year. Bear Stearns had its first fourth quarter loss ever last year and it booked $1.9 billion in charges related to the sub-prime mortgage market.
All this bad news led to calls for Cayne’s resignation from analysts and investors. “He had a mind-blowing loss that is his fault, and he should take responsibility for it,” an analyst told the Times last month.
In particular, the Journal reported, Bruce Sherman, CEO of Private Capital Management, a large shareholder of Bear Stearns stock, has pushed for changes at the firm.
Some members of the firm’s board were reluctant to ask Cayne to step aside, the Journal reported, because the firm had, in most cases, done very well under his leadership. However, they did wish that Cayne would go, the paper reported.
“He thought about it, and the board thought about it, and they agreed it was time to pass the baton,” said one unnamed source in the Journal’s story.
Cayne, 74, had taken some steps to right the ship at Bear Stearns. In August, he told pushed for and received the resignation of Warren J. Spector, the firm’s co-president. Like Cayne, Spector is a championship bridge player.
At the end of November, Bear Stearns announced it was cutting 650 jobs out of its work force of 15,500. And last month, the company’s top executives chose to pass up their annual bonuses.
In leaving, Cayne follows in the steps of leaders of several other financial houses that have been battered by the crisis in the sub-prime mortgage market.
In October, E. Stanley O’Neal retired from Merrill Lynch in the wake of an $8.4 million write-down. In November, Charles O. Prince III, left Citigroup after it announced a $5.9 million write-down.
Earlier in the year, Peter A. Wuffli, left USB, a Swiss bank, after losses there.
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