Dive Brief:
- Discover Financial Services’ interim chief executive officer, Michael Shepherd, agreed to remain in that role through June 30, but he’ll exit sooner if the card company closes on the proposed sale to bank giant Capital One earlier, according to a company filing with the Securities and Exchange Commission Friday.
- Shepherd will be paid a $2.4 million bonus if the deal closes by that June date, on top of an April salary of $1.75 million and $750,000 for each of May and June, per the terms of a March 27 letter of agreement between Shepherd and the company attached to the filing.
- The letter also ensured that Shepherd will continue to be entitled to certain benefits, including healthcare coverage, use of the company’s aircraft and an apartment, in addition to certain protections in the event of his separation from the Riverwoods, Illinois-based company.
Dive Insight:
The employment and compensation agreement between Shepherd and Discover comes as the card network seeks to close the $35 billion sale to Capital One, per an agreement last February.
The deal was expected to be completed early this year, but it continues to need regulatory approvals from the Office of the Comptroller of the Currency, part of the Treasury Department; the Federal Reserve Board of Governors; and the Department of Justice antitrust division. Some of the delay is likely attributable to the change in administrations resulting from President Donald Trump’s taking over from former President Joe Biden.
The Discover sale proposal has won approval from shareholders of both companies. The Office of the Delaware State Bank Commissioner has also approved the acquisition.
The merger, which would create the largest U.S. issuer of credit cards, has faced opposition from consumer advocates who argue it would likely increase fees for low-income customers because the combined company would control a significant share of the non-prime credit card market. The deal has also been criticized by some Democrats, who contend that Capital One has a checkered history of regulatory missteps.
Discover has had its own share of regulatory issues that contributed to a string of CEO switches over the past two years. Shepherd, a former chairman and CEO of BancWest, became the interim CEO last April after Michael Rhodes left Discover’s top post, following a short stint, to take the CEO job at Ally Financial. Rhodes had taken the CEO job at Discover in March 2024, taking over from interim CEO John B. Owen.
Shepherd joined Discover’s board of directors in August 2023, the same month Owen, a board member, was appointed interim CEO after the abrupt exit of former CEO Roger Hochschild. Hochschild was promoted to the CEO role in late 2018, but his tenure was mired in regulatory friction related to consumer compliance issues and student loan servicing practices that increased the company’s costs.
