Discover Financial Services experienced a significant decline in its share price, dropping more than five percent on Monday evening following the immediate resignation of president and CEO Roger Hochschild.
Hochschild, a veteran of the company with 25 years of service, is also stepping down from his position on the board. John Owen will serve as interim president and CEO while the company searches for a permanent replacement.
In late July, Discover disclosed that it is undergoing a regulatory review concerning the misclassification of credit card accounts dating back to 2007. Hochschild mentioned during an earnings call, “Beginning around mid-2007, we incorrectly classified certain card accounts into our highest merchant and merchant-acquiring pricing tier.”
Additionally, the firm announced it has received a proposed consent order from the Federal Deposit Insurance Corporation (FDIC), unrelated to the misclassification issue.
In response to these developments, Discover has chosen to suspend its share repurchase program, resulting in a decline of approximately 16% in its stock value since the news broke.
Tom Maheras, chair of Discover, emphasized that the Board remains committed to unlocking the company’s full potential, particularly in enhancing compliance, risk management, and corporate governance.