Protesters are after Ken Lewis’ job
Ken Lewis
Not often does an annual bank shareholder meeting attract protests — or attention of any kind — but these are different times. Protesters gathered outside the Bank of America shareholder meeting today in North Carolina.
They were advocating firing Ken Lewis, Bank of America CEO.
Why fire Lewis?
Shareholders turned against Lewis late last year after Bank of America acquired shaky company Merrill Lynch. Shares have fallen 42 percent since the beginning of 2009. Looks like the people who own stock in Bank of America are out for blood.
People who have personal loans, bank accounts or credit cards through Bank of America don’t need to worry about whether the company’s CEO hangs onto his job or not. But shareholders have certainly taken an interest.
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Rick Rothacker on Twitter reported that a truck with a “Fire Ken Lewis” sign drove around outside the shareholder meeting this morning as reporters gathered to cover it. Shareholder Fred J. Martin Jr, who said he was from San Francisco and owned 25,000 shares, had a few words for Lewis:
I question whether the board has effectively represented the stock holders who elected them. Whether you go or stay depends on whether you can turn around this large aircraft carrier and get it out of the puddle of systemic loss.
Lewis defends himself
Despite shareholders’ outrage, Lewis defended the company’s acquisition of Merrill Lynch and insurance company Countrywide. He said:
Countrywide and Merrill Lynch are two of the most important reasons Bank of America is the most profitable financial services company in the United States so far this year. Today, I can state without reservation that these acquisitions are not mistakes to be regretted. Both are looking more and more like successes to be celebrated.
Weighing in
Some large groups, including The California Public Employees’ Retirement System, or CalPERS, have publicly stated they’ll vote against re-electing Lewis. CalPERS, furthermore, has said it will vote against re-electing all 18 Bank of America board members.
Besides failing to disclose information about Merrill Lynch, CalPERS says it opposes $3.6 billion in bonuses that were awarded to Merrill Lynch employees ahead of schedule.
While CalPERS is considered an “influential fund,” the group only owns about one-third of 1 percent of the bank’s shares.
Requests for transparency
Shareholders’ main contention lies with the fact that when Bank of America acquired Merrill Lynch, it did not inform stakeholders about the dangers of the transaction. Lewis testified to the New York attorney general that this was because the Bush administration forced him to.
Richard W. Clayton, spokesman for the Change to Win Investment Group, which holds 33 million Bank of America shares, doesn’t think this is an adequate excuse
“There is absolutely no question [Lewis] had an obligation to be honest to the shareholders,” Clayton said.
Ordinarily, the shareholders of Bank of America holding a meeting wouldn’t be that interesting. Most of the meeting minutes likely are about how many ivory back scratchers they’re going to award themselves, or how many Bentleys they’re going to buy from the bounced check fees they like to keep raising. A lot of people don’t understand that CEOs actually have a high turnover rate. The idea of the king at the top of the pyramid is mistaken – CEOs and company presidents and VPs are just as susceptible to being fired as the janitors. And they do deserve the high pay they get, as work weeks are typically 6-7 days and 80 hours plus. Sympathy is still a hard ask however. (Someone who makes $2 million a year put a lot more away than someone who makes $20,000.) Ken Lewis knows what he’s doing, and if the Lynch acquisition had happened during a boom period they’d be toasting his health.