Controversial E*Trade director gone
Critical Path co-founder David Hayden leaves E*Trade's board of directors, just months after he became a lightning rod for criticism of E*Trade's governance.
Hayden resigned on Wednesday, E*Trade said in a regulatory document filed Friday. Hayden's resignation is effective immediately, and the company has already begun searching for another independent director to replace him, E*Trade spokeswoman Connie Dotson said.
Hayden resigned to focus on his next business venture, Dotson said.
"This is about where he is going with what he wants to do," Dotson said. "He is simply retiring from corporate directorship."
Hayden, who also resigned in May as chairman of Critical Path, was not immediately available for comment.
Hayden's role on the board, particularly as chairman of E*Trade's compensation committee, had been under scrutiny since last fall when E*Trade revealed that it had forgiven $15 million in loans to Chief Executive Officer Christos Cotsakos. Although E*Trade considered Hayden an independent director, corporate watchdogs charged him with having numerous conflicts. Not only had Cotsakos previously served on Critical Path's board of directors, but E*Trade was an investor in Critical Path and was one of the key, early customers of Critical Path's messaging products.
Criticism of Hayden and Cotsakos intensified this spring when E*Trade revealed that it paid Cotsakos more than $91 million in compensation, including the loan forgiveness, money to pay the taxes related to this loan forgiveness, as well as salary, bonus, restricted stock and new option grants. Under pressure from shareholders, Cotsakos later gave back part of his 2001 compensation.
Despite the uproar, Hayden was easily re-elected in May to E*Trade's board of directors. He ran unopposed, and nominations for the board were closed before the salary information came out.
Hayden's resignation was not related to the uproar over Cotsakos' salary, Dotson said.
In addition to filling Hayden's position, E*Trade is also looking to fill another open board slot. The company created a new board position for an independent director as part of the settlement of a shareholder lawsuit filed against the company. The suit charged Cotsakos and the company's board of directors with gross mismanagement and breach of fiduciary duties in relation to E*Trade's forgiveness of the $15 million loan to Cotsakos.
As part of that settlement, E*Trade agreed to have the new, independent director replace Hayden as chairman of the compensation committee, although Hayden would have remained a member of the committee.