New Century jettisons CEO
Collapsed sub-prime lender New Century Financial Corp. said Tuesday that it fired its chief executive and replaced him with a consultant to oversee the company’s liquidation.
New Century said it dismissed Bradley A. Morrice “without cause” -- a condition that would have brought him at least $5.4 million in severance payments had the company not gone bankrupt. Instead, the lender will pay Morrice severance based on a court-approved formula that limits his exit pay to less than $40,000, people close to the bankruptcy proceedings said.
New Century, which was the largest independent mortgage lender to high-risk borrowers, sought protection from creditors in a bankruptcy filing in April after succumbing to a flood of soured loans.
Morrice was dismissed Friday, and he resigned from the company’s board, the company said in a Securities and Exchange Commission filing Tuesday. New Century also terminated Anthony T. Meola, executive vice president of loan production, without cause.
Holly Etlin, a crisis management consultant whom New Century had brought in as its chief restructuring officer, was named to succeed Morrice as CEO. She is to oversee the firm’s participation in the bankruptcy proceedings and the auction of its computer systems, software, databases and furniture.
Morrice’s employment contract had specified that he was to receive three times his base pay of $750,000 a year, or $2.25 million, for termination without cause. He also was to receive a payment equivalent to his largest annual bonus of the last three years, which was nearly $3.4 million in 2004, the high-water mark for profits in the sub-prime mortgage industry.
But the judge in the bankruptcy case has capped severance payments at two weeks’ pay plus no more than $10,950 for vacation and other paid time off that employees are owed. Two weeks’ pay for Morrice would be about $29,000.
Morrice, 50, of Laguna Beach, could not be reached for comment. He was one of New Century’s three co-founders in 1995. The others, Edward Gotschall and Robert Cole, left as corporate executives last year but remain on the board.
More than 5,000 New Century employees have been laid off. The company has about 625 left, including about 380 who work at its loan-servicing unit, which is being sold to an investment firm.
