Charlie Fote retired as chief executive and chairman of First Data Corp. in a surprise move Monday, fueling analyst speculation that he was pushed out because of weak stock performance and that the $33.4 billion company might be broken up or sold.
First Data owns Western Union, the world’s largest provider of money-transfer services, and dominates in processing credit- and debit-card transactions. The Greenwood Village- based company – which Fote moved from Atlanta in 2001 – employs 32,000 worldwide, including about 3,000 in the Denver area.
Henry “Ric” Duques, who groomed Fote to replace him as CEO in 2002, will run First Data for two years – or until the board of directors finds a replacement.
Duques, 62, will relocate to Denver from Florida while Fote, 56, is expected to stay in the Denver area, working as a consultant with the company for the next 18 months, said First Data spokesman Colin Wheeler.
“Given the lackluster performance of (First Data) shares over the past few years and frustration with the company’s recent strategic direction, we believe that Fote was forced to step down from his position,” Prudential Equity Group stock analyst Bryan Keane wrote in a research note, adding that the moves “will rekindle speculation about a breakup or sale of the entire company.”
First Data shares rose 4.8 percent Monday to close at $43.65, a 52-week high. Since Fote rose from president to CEO in 2002, First Data shares had risen just 6.2 percent, from $39.23 to $41.64, adjusting for a stock split.
In a conference call with analysts, Duques said the company was focused on its lagging credit-card issuing business but that long term, “everything is on the table for discussion.”
In a news release, First Data cited “personal reasons” as motivating Fote’s departure, without elaborating. Fote has worked for First Data and its predecessors since 1975. Illness was not behind Fote’s retirement, a source said.
Duques told analysts that Courtney Jones, the head of First Data’s audit committee, reassured him that First Data didn’t have any hidden accounting problems.
Fote stepped down as CEO immediately and will stay on as chairman until the end of the year and as a director until the next annual meeting.
“I am proud of what we have accomplished, and I leave knowing the company is in an excellent position, with its best years still ahead,” Fote said in a statement.
The company said he was not available for interviews.
Prudential analysts estimate the various business lines of First Data are worth at least $50 a share, a value that breaking apart the company could help realize, analysts said.
The company announced this month it had hired Morgan Stanley to study options for its Omaha-based credit-card issuing business, which has struggled after losing large contracts with the Bank of America and J.P. Morgan Chase & Co.
Some analysts want to see the company go deeper, splitting apart Western Union from the credit- and debit-card processing business.
Western Union this month agreed to spend $8.1 million to combat consumer fraud in money transfers in an agreement with 47 states and the District of Columbia.
Fote’s departure is a loss for Denver, said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.
Shortly before Boeing Co. announced its move from Seattle to Chicago in 2001, bypassing Denver, Fote announced that First Data would relocate from Atlanta to the Denver area. The company added high-paying jobs locally as the dot-com bust left thousands in the state jobless.
Western Union enjoyed rapid growth under Fote’s direction.
Fote had a reputation as a hard- driving executive who called his top team together every morning at 6:30. Duques said he would work to improve morale at the company and give First Data a work environment that is “both stimulating and fun.”
Staff writer Aldo Svaldi can be reached at 303-820-1410 or asvaldi@denverpost.com.
CEO’s Bios
Charles Fote
Age: 56
At First Data: Became chief executive in 2002; became chairman in 2003; has worked at First Data or its predecessors since 1975
Education: Graduated from Central Connecticut State University
What he said: “I leave knowing the company is in an excellent position, with its best years still ahead.”
Henry “Ric” Duques
Age: 62
At First Data: Chief executive, 1992 to 2002; chairman, 1992 to 2003
Also: Chief executive and president of Data Based Services Group, 1987 to 1992
Education: Graduated from George Washington University
What he said: “We have the normal marketplace competitive situations. We don’t have other type of problems that are energy- draining and not productive.”
