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Roger Hochschild will step down as CEO and president of Discover, effective immediately, one month after the company conducted an internal review of compliance and corporate governance.
On Monday (August 14), Discover announced the resignation of Hochschild as CEO and president.
“The Board and Roger have agreed that now is the right time to transition leadership, and we thank Roger for his 25 years of service to the company,” said Tom Maheras, chairman of the board.
Maheras added that Discover’s board is focused on reaching its full potential, including its commitment to “enhancing compliance, risk management and corporate governance".
Hochschild said: “It has been a privilege to spend 25 years with the people of Discover at this amazing company.”
The resignation took effect immediately, but Hochschild will remain with the company in an advisory capacity through the end of the year to ensure a smooth transition.
The former CEO will keep his base salary through to the end of the year. However, he will not be entitled to participate in the company’s short-term incentive programme and his long-term equity awards granted in 2023 will be cancelled too, as per a transition letter signed between the two parties.
In the meantime, Discover has appointed John Owen, a member of the board, to serve as interim CEO and president while the search for a permanent successor goes on.
Hochschild joined Discover in 1998. He served as president and chief operating officer from 2004 to 2018, when he took over the role of CEO from David Nelms, who had also held that position for 20 years.
The transitional letter also requires Hochschild to assist the company in any litigation or investigation, either internal or carried out by a government agency, in which Discover may become involved.
It adds that the letter does not prohibit the ex-CEO from reporting possible violations of law to governmental agencies nor from participating in any whistleblower programmes.
Although the announcements did not disclose further details of the abrupt resignation, it follows the revelation of compliance issues within the company.
Internal review of compliance, risk management and corporate governance
In its Q2 2023 earnings, Discover revealed that it is subject to an investigation by the Federal Deposit Insurance Corporation (FDIC) regarding consumer compliance, and that it received a proposed consent order from the banking regulator.
Additionally, beginning in 2007, the card brand had incorrectly classified certain credit card accounts into its highest merchant and merchant acquirer pricing tier.
The misclassification meant that certain merchants and merchant acquirers had paid higher prices for accepting Discover cards than they should have done.
The company confirmed that its management was taking action to correct the card misclassification and to prepare a programme to compensate merchants and merchant acquirers.
At the time, Discover said it set aside $365m to provide refunds to merchants and merchant acquirers.
It also confirmed that the company is in discussions with regulators “regarding this matter and corporate governance and risk management”, and that it is conducting its own “internal review” of compliance and governance.
At the same time, Discover decided to halt all share repurchases pending the conclusion of the internal review.
Since the announcement in July, the company’s share price has fallen nearly 25 percent.
VIXIO asked Discover whether there is a link between the resignation and these compliance issues. A spokesperson said the company has “no additional comment beyond the release”.
