- Key insight: KeyCorp has named a new lead independent director, and it plans to replace two existing board members with nominees who have extensive banking experience.
- What’s at stake: The changes, which were announced Tuesday, come about a month after an activist investor criticized the bank’s performance and called for the ouster of its CEO.
- Forward look: The nominees for director will sit for election at the bank’s 2026 annual meeting.
KeyCorp is making changes to its board of directors following a series of demands by an activist investor that’s criticized the bank’s stock-price performance.
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The parent company of KeyBank said Tuesday that it has installed a new lead independent director, effectively immediately. It has also nominated two new directors, both of whom had extensive careers in banking, to succeed a pair of directors who plan to retire this spring.
Todd Vasos, the CEO of Dollar General, is Key’s new lead independent director, succeeding Alexander Cutler, who has held the role since at least 2010.
Meanwhile, Antonio “Tony” DeSpirito, a former managing director at BlackRock, and Christopher Henson, who was a high-level executive at Truist Financial before retiring in 2021, have been nominated for one-year board terms.
In December, the activist investor group HoldCo Asset Management issued a 58-page report that criticized Key’s board for share dilution over the years and called for the termination of CEO Chris Gorman. The group also urged Key’s board to adopt a moratorium on bank acquisitions; use all of its excess capital to make share repurchases; create an independent capital allocation committee; appoint a new lead independent director; get rid of certain other directors; and to not re-nominate its longtime lead independent director.
Gorman did not mention HoldCo or its report Tuesday during the bank’s fourth-quarter earnings call. He said the changes being made at the board level “reaffirm [the] board’s commitment to strong corporate governance and long-term shareholder value.”
As part of the reshuffling, longtime directors Ruth Ann Gillis and Carlton Highsmith will give up their seats at the company’s 2026 annual meeting. Cutler will relinquish his position as lead independent director but remain on the board.
During Tuesday’s conference call, Gorman restated Key’s lack of interest in pursuing bank mergers and outlined an acceleration of share buyback activity this year. He said Key plans to repurchase at least $300 million of stock during the first quarter and expects to buy back similar amounts in future quarters this year.
HoldCo has called for the $184.4 billion-asset bank to “deploy all excess capital, now and in the future, after funding organic growth and paying the regular dividend, to repurchase stock.”
HoldCo declined Tuesday to comment on Key’s announcements. As of mid-December, the hedge fund owned about $142 million of Key shares, or about 0.7% of the bank’s stock.
Key’s board changes came one week after David Wilson, who joined the board in 2014, announced his retirement due to personal health reasons. His departure reduced the size of the board from 15 members to 14.
The board will continue to have 14 directors following the upcoming election, a Key spokesperson said Tuesday.
KeyCorp is one of several banks that found itself in the crosshairs of HoldCo during the second half of 2025. The South Florida-based investment firm made waves in the banking sector by calling out Cleveland-based Key and four other banks for alleged mismanagement.
The highest-profile instance was HoldCo’s criticism of Comerica. In July, HoldCo urged the Dallas-based bank to sell, saying it had made years of poor financial choices and arguing that it had failed to address its long-lagging stock price.
By early October, Comerica had reached a deal to sell itself to Fifth Third Bancorp in Cincinnati. Valued at nearly $11 billion, it was the largest bank M&A deal announced in 2025. Fifth Third and Comerica have recently said they are on track to finalize the acquisition on Feb. 1.
During the fourth quarter, KeyCorp reported net income of $510 million, compared with a net loss of $244 million in the year-earlier quarter, when the company incurred a one-time charge related to the repositioning of its securities book. Earnings per share totaled 43 cents, topping the average 39 cents per share predicted by analysts polled by S&P Capital IQ.
Revenue for the fourth quarter was $2.0 billion, a sharp uptick from the same three-month period in 2024, reflecting upticks in both net interest income and noninterest income, the bank said. Noninterest income in the year-ago quarter was a loss of $196 million, reflecting a $915 million loss on the sale of securities.
Noninterest expenses totaled $1.2 billion during the fourth quarter, up 1% year over year.
On the loan front, Key has been remixing its portfolio for several quarters and continues to intentionally run off lower-yielding consumer mortgages, including those made to doctors and dentists through the bank’s Laurel Road business, the bank said Tuesday.
Average loans during the fourth quarter were $106.3 billion, with total consumer loans shrinking to $30.3 billion, down from $32.6 billion in the year-ago quarter. At the same time, commercial loans grew from $72.1 billion to $76 billion.
Overall, loans are expected to grow 1-2% for all of 2026, with commercial loans growing about 5%, Chief Financial Officer Clark Khayat said on the call. The bank is focusing on booking more home equity loans, which are “slowly but surely” replacing the lower-yielding mortgages, Gorman said.
