Internal CEO appointment spells success: Report.
Rumors are flying around the web that Fannie Mae’s incumbent general counsel Timothy Mayopoulous might be named the company’s next CEO.
Sources revealed to the Wall Street Journal that Mayopoulous is among the top echelon of executives on Fannie Mae’s shortlist of potential CEOs. However, the search is still in its early stages, and officials are canvassing external candidates for the high-profile position.
Mayopoulous is known for his stint at Bank of America (BofA) where he served as general counsel. In 2008, he was suddenly fired from his position at the financial services firm; according to industry observers, it was BofA’s merger with Merrill Lynch, coupled with the financial meltdown, that resulted in his controversial lay off.
The Journal article notes that if Mayopoulos becomes CEO of the embattled government- controlled company he will be caught between a rock and a hard place:
If the job went to Mayopoulos, that would bring him into frequent contact with Bank of America, which became Fannie's largest customer after its 2008 acquisition of Countrywide Financial. Mayopoulos, who joined Fannie in April 2009, has taken a leading role shepherding Fannie through an increasing litigious environment, though he has recused himself from dealing with Bank of America in his current job.
To make matters worst, finding the right candidate will be a serious task since Fannie Mae’s cousin Freddie Mac is also looking for a new chief executive.
On the other hand, an internal CEO appointment can spell success. According to a report released last year by the Kelley School of Business at Indiana University and global consulting firm AT Kearney, corporations that recruit top CEOs from outside their firm could see revenues plunge – a move the mortgage giants would do well to avoid in the current turbulent economy. At the same time, the report points out, the cost of attracting and retaining an external executive is dramatically higher than the cost of promoting an internal candidate.
Fannie has chosen recruiters Heidrick & Struggles International to handle its CEO search; Freddie has hired Spencer Stuart to find it a new head honcho.
