(Barron's Advisor) - LPL Financial ’s board of directors said late Tuesday that it had terminated CEO and President Dan Arnold for making statements to employees that violated the company’s code of conduct.
The board said it terminated Arnold for cause on the recommendation of a special committee of directors in the course of an investigation by an outside law firm. The board appointed Rich Steinmeier, the company’s chief growth officer, as interim CEO, effective immediately.
“LPL’s Code of Conduct requires every employee, no matter their title, to foster a supportive and professional workplace and show respect to each other, our stakeholders, and the broader community,” James Putnam, chair of the board of directors, said in a statement. “Mr. Arnold failed to meet these obligations.”
LPL Shares fell 4.6% in after-hours trading after the company made the announcement. LPL’s stock price has risen 543% since January 2017 when Arnold became CEO, but shares have struggled this year on concerns about interest rates paid on clients’ uninvested cash.
Putnam said the board had confidence in Steinmeier, 50, and LPL’s management team to ensure a stable transition.
A representative of LPL declined a request for further comment.
Arnold couldn’t be reached for immediate comment.
CEO compensation. In an SEC filing, LPL said that because Arnold was terminated for cause, he isn’t entitled to receive severance benefits pursuant to the company’s severance plan. Arnold’s outstanding equity awards, whether vested or unvested, are also subject to automatic forfeiture, the company said.
The board said that on the recommendation of its compensation and human resources committee, it is deferring the automatic forfeiture of a portion of Arnold’s vested options to purchase common stock of the company—subject to the satisfactory negotiation of and Arnold’s entry into a settlement agreement for the benefit of the company and its shareholders.
Separately, Arnold resigned from the board on Oct. 1, the company said.
Arnold had served as CEO of the company since 2017, overseeing brisk expansion. LPL has been aggressively recruiting financial advisors and has inked several acquisitions that have made it a leader in the independent broker-dealer sector. Last month, LPL said it was buying the Investment Center, an independent broker-dealer and registered investment advisor firm that has 240 advisors and oversees approximately $9 billion of client assets.
Acquisitions like that have turned LPL into a wealth management giant. The company had $1.5 trillion in advisory and brokerage assets as of the end of the second quarter.
New leadership. Steinmeier has been with LPL since 2018 and has played an important role in the company’s expansion efforts. He served as divisional president of business strategy and growth from 2018 to April 2024, when he was promoted to chief growth officer. In that role, his responsibilities have included leading teams responsible for shaping corporate and business line strategy and recruiting new financial advisors and institutions, according to the company.
Before joining LPL, Steinmeier worked at wealth management company UBS .
Putnam expressed the board’s confidence in Steinmeier and that LPL can continue on its growth trajectory. “As one of the industry’s largest and fastest-growing wealth management firms, LPL’s sole focus remains on ensuring its clients have everything they need to support their continued success,” Putnam said. “The company has significant momentum in the marketplace and its business model and financial strength position it well to continue creating long-term value for clients, employees and shareholders.”
By Andrew Welsch
October 1, 2024
