CIT appoints ex-Merril boss

08/02/2010

John Thain is the new chief executive of CIT Group, in another of those appointments which to leasing industry onlookers may seem hard to fathom, but presumably makes total sense to headhunters, and to the market.

Thain didn’t exactly shine in his year as chief executive of Merril Lynch, and was jettisoned by Bank of America shortly after they acquired Merril (a move that now has BofA’s leaders from those days facing charges). What can the rationale for his appointment be, exactly? Some reports say it’s a good move for him, that might help to “rehabilitate him from the wilderness” by associating him closely with helping small businesses (CIT’s forte, apparently, in addition to the trains and boats and planes). So, good for him then, but how is it good for CIT, don’t they need rehabilitating from the wilderness, too? 

Perhaps it’s the line that a CEO of a large quoted US group needs to have the proven charisma to carry it off on the big stage, have the right contacts and be able to place the right words in the right ears? Well, there’s plenty of companies more successful than CIT that do perfectly well without high profile CEOs, and usually ones that know their businesses inside out, although to be fair to Thain, we don’t know if he understands leasing or not.

Sceptical onlookers may be forgiven for wondering why CIT Group’s own internal succession management hasn’t furnished the group with a natural successor. Why not let a leasing pro have a go, or maybe succession management is something just practised by the lower echelons, and doesn’t penetrate as far as the separate world of the boardroom? 

Perhaps there just aren’t enough talented individuals on the market to fill the position, and the same names rotate through the line up of candidates, but that is hard to believe in a country as full of business talent as the US. 

Is it because he’s a barnstorming, tub thumping people motivator that will get dispirited troops back on their feet and ready to fight? Not if you accept what some papers say, that it’s because of the special skills needed to renegotiate CIT’s debt load, and that he will have to work closely with the Federal Reserve and the FDIC to bring it into compliance on a variety of issues. But then, Thain is quoted as saying, “Fixing these kinds of financial problems is generally more difficult and takes more time than you think,” (it’s hard to imagine mere mortals winning a job appointment using that kind of line).

There is one saving grace of the appointment, though, and that is the compensation package, in truth a relatively modest salary of $500,000, with shares that vest over several years. Ah well, as it’s CIT, that larger than life global lessor who many of us have worked for, or with, we wish him and CIT Group all the very best.

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