S&P Leadership Change Reportedly Not Related to Downgrade

NU Online News Service, Aug. 24, 2:46 p.m. EDT

Douglas Peterson will replace Deven Sharma as president of Standard & Poor's, effective Sept. 12, 2011, the rating agency has announced.

Peterson is currently chief operating officer of Citibank N.A.

The change comes weeks after S&P downgraded the U.S. long-term sovereign debt, drawing criticism from the Obama administration, super-investor Warren Buffett and legislators, including Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson (D-SD), who said he was “deeply disappointed in S&P's decision to enter into the game of political punditry.”

In the insurance industry, Insurance Information Institute President Robert Hartwig earlier this month questioned why France would be rated above the U.S. when it does not even have its own currency. He said at the time that the reality is that no other market is “as large and liquid as the U.S. Treasury market is and will remain,” and added that “it's been a tough ride for S&P” after the downgrade was announced.

But while media speculation points to the fallout from the downgrade as a possible reason for Sharma stepping down, a person familiar with the matter insists the change in leadership “has nothing to do with the downgrade.”

Pointing to the timeframe, the source notes that appointments like this are not made in a day, and says S&P has gone through a process that began at the start of 2011 and was well underway by the time the rating action was taken.

Instead, the source says that, as is pointed out in S&P's statement, Sharma began looking for other opportunities when S&P announced late last year that it would split into two separate organizations: S&P the credit ratings service and McGraw-Hill Financial.  

Under the new structure, Sharma would see much of his position moved out of his area of responsibility.

The source, as well as S&P's statement, says Sharma helped with the split and then began seeking other opportunities.

In S&P's statement, Harold McGraw III, chairman, president and CEO of the McGraw-Hill Cos., says, “As we welcome Doug, I particularly want to thank Deven for his dedicated leadership of S&P.”

Sharma says, “It has been a privilege to serve as the president of S&P and I am proud of what we as an organization have achieved over the past four years.”

Sharma joined S&P in 2006 as executive vice president, investment services and global sales. He was named president in 2007.

Peterson was CEO of Citigroup Japan from 2004 to 2010. He was previously a chief auditor for Citigroup from 2001 to 2004.