Bank of New York Mellon'sChairman and Chief Executive Officer Robert Kelly was fired for an abrasive management style, according to people familiar with the matter.
People familiar with the deliberations say BNY's board of directors felt his management technique was hurting morale, and feared that staff may leave the company as a result.
"The story is unusual because there really isn't much more than meets the eye," said one person who spoke with CNBC. "His style was creating problems within the organization."
Prior to the board's decision, independent directors met in small groups for a couple of weeks, with human resources staff attending at least one of those meetings.
The entire group of independent directors met for the first time on Tuesday, August 30, in order to make their decision.
Neither Bob Kelly nor Gerald Hassell, both corporate members of the board, knew anything about the meeting, nor the weeks of discussion that preceded it, said people familiar with the chain of events.
Both were surprised when they heard the outcome, said a person with knowledge of their reactions. The bank announced Kelly's departure on Wednesday.
Kelly could not be reached for comment. Spokesmen for BNY Mellon declined to comment except to reiterate the language of the bank's press release, which said that Kelly was asked to step down because of "differences in approach to managing the company." At Tuesday's meeting, the board discussed whether the company had an adequate succession plan in place to be able to responsibly fire Kelly.
It was decided that bank president Gerald Hassell was up to the job. His management style was described as very different from Kelly's, and his appointment was seen as a morale booster.
Some directors also asked whether the board should go back to Kelly and ask him to modify his style, said people with knowledge of the matter. It would not have been the first time the board had done so, those sources said.
In the end, Kelly had no defenders on the board when it came to his management style, says a person with knowledge of the discussions.
Kelly's banking talent was widely recognized by directors and industry participants alike. The board supported Kelly's 3-year plan emphasizing custody services and asset management as BNY Mellon's key business lines. Nor did the board begrudge Kelly for recent negative press received by the bank. BNY has been criticized for its behavior as a trustee of various mortgage-backed securities, but the issue never came up on Tuesday.
The recent departures of high-level executives, including Ron O'Hanley from asset management and Dave Lamere from wealth management, didn't terribly spook the board either, sources said.
O'Hanley went to a bigger job as CEO of Fidelity asset management. Lamere reportedly left because he didn't get to add O'Hanley's former empire to his own wealth management fiefdom. BNY Mellon brought in Curtis Arledge from BlackRock to run asset management.