Magazine article American Banker

Wachovia Using Directors's Companies in Big Construction Projection

Magazine article American Banker

Wachovia Using Directors's Companies in Big Construction Projection

Article excerpt

Wachovia Corp.'s decision to use the companies of three of its board members to help construct its new $24 million office building has raised some eyebrows.

Robert M. Holder Jr., Herman J. Russell, and Charles McKenzie Taylor, all members of Wachovia's board of directors, own companies that were deemed best for the job, according to Wachovia's proxy, which was distributed to shareholders in March.

Observers said the practice of using board members' companies for contract work is no longer altogether acceptable.

"In the past it had been common, but today it is perceived as not good corporate practice," said John M. Nash, chief executive officer of the National Association of Corporate Directors.

"From a public perception and from a corporate governance point of view, it is not a good idea."

Construction begins this month on the 235,000-square-foot building, which will be located near the company's Winston-Salem, N.C., headquarters.

Holder-Russell Construction Co., a joint venture that is composed of a firm owned by Mr. Holder and one owned by Mr. Russell, won the bid to act as general contractor for the project. Wachovia estimates that it will pay Holder-Russell about $753,000, plus expenses, for its work.

Mr. Taylor is an officer, director, and owner of Taylor & Mathis Inc., which was hired to plan, design, and oversee construction of the office project, handle budget matters, and guide architectural design. Taylor & Mathis will receive approximately $360, 000 for its work, according to the proxy. …

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