Credit card industry leader Discover Financial Services (DFS) has officially named Michael G Rhodes its CEO and president. The appointment is set to take effect on or before 6th March this year, coinciding with his inclusion on the Company’s Board of Directors. Additionally, Mr. Rhodes will assume the role of President at Discover Bank and be appointed to the Discover Bank Board of Directors, effective on the same date.
John Owen, who has served as the interim CEO, President of the Company, and interim President of Discover Bank since August 14, 2023, will continue in these roles until Mr. Rhodes officially joins Discover. Following Mr. Rhodes’ official commencement, Mr. Owen will transition to serving as a member of both the Company’s Board of Directors and the Discover Bank Board of Directors.
Key Takeaways:
- Leadership Transition at Discover Financial Services: Discover Financial Services (DFS) announces the appointment of Michael G. Rhodes as its CEO and President, effective on or before 6 March this year. This marks a strategic leadership transition for the credit card industry leader.
- Rhodes’ Extensive Financial Industry Experience: Michael G. Rhodes, a seasoned veteran from TD Bank Group, brings over 25 years of extensive experience in the financial industry to Discover. His background includes leadership roles at TD Bank Group, Bank of America, and MBNA America Bank.
- Comprehensive Compensation Package Underscores Significance: As part of his compensation package, Rhodes will receive a base salary of $1 million, annual short-term and long-term incentive awards, and a transition award from Discover. This comprehensive package emphasizes the significance of his role in leading DFS.
- Strategic Leadership Amid Compliance Challenges: Rhodes takes charge at a critical time for Discover as the company addresses regulatory issues and reinforces its compliance efforts. With nearly $500 million dedicated to compliance and risk management, Discover aims to resolve major compliance issues by mid-2024 under Rhodes’ leadership.
DFS Welcomes Michael G. Rhodes as CEO and President: A Look at His Strategic Role
Discover Financial Services has chosen Michael G. Rhodes, a seasoned veteran from TD Bank Group, to step into the role of CEO and president. John Owen, who has been acting as the interim CEO and President of the Company, as well as interim President of Discover Bank since August 14, 2023, will continue in these roles until Mr. Rhodes officially joins Discover. Simultaneously, Mr. Rhodes will undertake the responsibilities of President at Discover Bank and join the Discover Bank’s Board of Directors, with both positions effective on the same date.
As part of his compensation package, Rhodes will receive a base salary of $1 million, according to Monday’s filing by Discover. Mr. Rhodes brings over 25 years of extensive experience in the financial industry to Discover. Before being a Group Head at TD Bank Group (Canadian personal banking), he oversaw a retail product division serving customers through a network of over 1,000 branches, telephone support, and award-winning online and mobile capabilities.
Mr. Rhodes has held several important positions at TD, including Group Head of Technology, Shared Services, and Innovation. He joined the company in 2011 to oversee the North American Credit Card and Merchant Services unit. Senior leadership positions at Bank of America and MBNA America Bank further highlight his wealth of expertise in the financial services industry.
Mr. Rhodes expressed his honor in joining Discover at a pivotal moment for the company. He looks forward to leading the team of 20,000 employees in fulfilling the essential mission of assisting people in achieving brighter financial futures. Drawing from his career experience, he emphasized his clear understanding of delivering an excellent customer experience at every interaction point.
Confident in Discover’s strong foundation and dedicated employee base, Mr. Rhodes believes the company is well-prepared to seize market opportunities. He eagerly anticipates collaborating with Tom, the management team, and his colleagues as they collectively work towards advancing Discover’s culture, emphasizing compliance and customer service, and driving sustainable long-term financial performance.
TD Bank Group had announced Michael Rhodes’ resignation a few days before the recent announcement, which disclosed that Rhodes had been considered a potential candidate for the Chief Executive Officer position at TD Bank Group.
Discover had been actively seeking someone new for the position of CEO following the abrupt resignation of Roger Hochschild in August. The company faced compliance issues recently, prompting the search for a suitable candidate. Interim CEO John Owen stated that Discover was looking at external and internal applicants for the position during the company’s third-quarter results call in October.
Tom Maheras, Chair of the Board, highlighted that Michael’s appointment results from a thorough search process to find the right leader to guide the company in achieving its strategic and financial objectives. He emphasized Rhodes’ extensive experience and proven leadership in various global banking and payments industry roles. Maheras noted Rhodes’ successful track record in leading sophisticated financial services operations.
Expressing confidence in Rhodes’ leadership, Maheras believes that Discover, under his guidance, will realize its full potential. He expects Discover to provide exceptional customer care at the highest industry standards while continuing its commitment to enhancing risk management, corporate governance, and compliance.
Maheras also extended gratitude to John for his leadership during the CEO search. On behalf of the entire Board, he expressed appreciation for John’s contributions and looks forward to continuing to benefit from his experience and insights as a valued member of the Board.
Michael G. Rhodes Takes Charge At Discover Amid Compliance Challenges
Rhodes will take over as CEO of Discover at a pivotal moment as the business strengthens its compliance efforts and deals with various regulatory concerns. Discover resolved a consumer compliance investigation at its subsidiary, Discover Bank, in September by entering into a consent settlement with the Federal Deposit Insurance Corporation. The SEC is conducting an inquiry after the business revealed in July that there was a problem with the mishandling of cards, which impacted merchants and acquirers.
Due to ongoing regulatory issues, the company is selling its portfolio of student loans. This year, Discover plans to spend close to $500 million on risk management and compliance to address these problems. CFO John Greene expects spending to be the same or higher in the upcoming year. By mid-2024, the corporation hopes to resolve the most significant compliance issues. While at TD’s merchant banking and credit card division in North America, Rhodes played a key role in moving TD’s Canadian credit division from sixth to the top of the industry.
About Michael G Rhodes
Michael G. Rhodes currently serves as the Group Head at TD Bank Group in the position of Canadian Personal Banking, the largest retail bank in Canada, catering to over 13 million customers. His previous roles within TD included the Group Head for Technology, Shared Services, and Innovation from 2017 to 2021. Before that, he held positions such as the Head of Wealth Management at TD Bank and Head of the Consumer Bank at America’s Most Opportunely Bank.
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2011 Michael joined TD to lead the North American Credit Card and Merchant Services business. During his tenure, he was pivotal in advancing TD’s Canadian Credit card business from the sixth to the first position within three years.
With over 25 years of experience in the financial services industry, Michael has held senior executive-level positions at Bank of America and MBNA America Bank. His extensive career has taken him across the United States, Canada, Spain, Ireland, and the United Kingdom, where he has contributed to various roles within payments and banking. Notably, he served as the CEO of a portfolio company backed by a top-tier private equity fund, Golder, Thoma, Cressey, Rauner, Inc.; CMO of Maryland Bank National Association America Bank; and CEO of Maryland Bank National Association Europe Bank Limited. Michael began his engineering career at Failure Analysis Associates, a leading engineering and scientific consulting firm.
Michael is a valued member of the Executive Council of The Canadian Bankers’ Association. Beyond his professional commitments, he actively supports several significant social causes. He serves on the Board of Trustees of Duke University and engages in fundraising efforts for St. Michael’s Hospital, a prominent teaching and research hospital in Toronto. Additionally, he is involved with the Boys and Girls Club. His past community involvements include contributions to the United Way, Christiana Care Health Systems, the Thurgood Marshall Scholarship Fund, Winterthur Garden Museum and Library, and the Delaware Symphony Orchestra.
Michael holds a Master of Business Administration from the Wharton School at the University of Pennsylvania. Alongside his business education, he has an engineering degree from Duke University. His commitment to professional excellence and philanthropy reflects his dedication to positively impacting various spheres of life.
About Discover
Discover Financial Services is a holding company that is actively involved in providing direct banking and payment services. Its operations are divided into the Direct Payment and Banking Services segments. The consumer banking offerings encompass a range of products and services, such as personal loans, private student loans, deposit products, and home equity loans. On the other hand, the Direct Banking segment focuses on providing Discover-branded credit cards to individuals and small businesses through the Discover Network.
The Payment Services segment includes Diners Club, PULSE, and the company’s network partners business. This involves issuing debit, prepaid, and credit cards by third parties on the Discover Network. Established in 1986, the company is headquartered in Riverwoods, IL, and has been a significant player in the financial services landscape.
Conclusion
Michael G. Rhodes assumes a pivotal role as the CEO and President of Discover Financial Services, bringing over 25 years of extensive financial industry experience to the position. His appointment, effective in March this year, comes at a crucial juncture for Discover as it addresses compliance challenges. Rhodes, a seasoned veteran from TD Bank Group, is set to lead Discover’s 20,000 employees in achieving the essential mission of fostering brighter financial futures.
The “wide” compensation package underscores the significance of his role, with a focus on customer experience, compliance, and long-term financial performance. As Discover goes through regulatory issues, Rhodes’ proven leadership is anticipated to guide the company toward realizing its full potential, emphasizing exceptional customer care and strategic growth.
Frequently Asked Questions
Q: Who is Discover's CEO?
Michael G. Rhodes has been appointed as the next CEO and President of card issuer Discover Financial Services, effective March 6, 2024.
Q: Who was the previous Discover CEO?
David Nelms served as the CEO of Discover Financial from 2004 to 2018. Joining Discover in 1998 as President and Chief Operating Officer, Nelms played a key role in the company's leadership. In October 2018, Roger Hochschild succeeded Nelms as CEO. Hochschild, a 25-year veteran of Discover serving as President and Chief Operating Officer since 2004, unexpectedly resigned from his CEO position and the board in August 2023.
Q: What happened to the former Discover CEO?
In an unexpected move in August 2023, Roger Hochschild resigned as CEO and President of Discover Financial Services. This decision coincided with the company facing potential regulatory action due to a credit card “misclassification” issue. The repercussions of this matter included increased charges for certain merchants and merchant acquirers, with Discover estimating a financial impact of $500 million in the current year.
Q: What Salary Can Rhodes Expect?
Discover has disclosed that Rhodes's base salary is $1 million, as stated in the filing released on Monday. Additionally, he is entitled to an annual short-term incentive target of $2 million and a long-term incentive target of $7 million. Furthermore, as part of the transition, Rhodes will receive a $750,000 award from Discover.
