Bank CEO was protested
Despite outcry from shareholders and protests at Bank of America’s annual shareholder meeting today, Ken Lewis will retain his position as CEO of Bank of America.
The rest of the board will also remain in their current jobs. For details on protests, read my earlier post.
Thou doth not protest enough
Though shareholders were up in arms because of the purchase of failing Merrill Lynch, Bank of America spokesman James Mahoney says all of the board’s 18 members were re-elected by “a comfortable margin.”
Groups such as the California Public Employees Retirement System fund and companies including Egan- Jones Proxy Services called for Lewis to quit and voted against his re-election in the shareholder’s meeting. Nevertheless, the Bank of American board will remain unchanged, and the bank will continue business as usual, including mortgage loan modification and cash advances.
Root of the controversy
The shareholders were angered by the purchase of Merrill Lynch late last year because of a lack of disclosure on Lewis and the board’s part. The Bank of American board failed to inform shareholders of the dire financial situation Merrill Lynch was facing before it held a vote on the matter.
Since the beginning of 2009, the value of Bank of America shares has fallen 42 percent. Because of this, though Ken Lewis defended his choice to buy Merrill Lynch and insurance giant Countrywide, shareholders were not convinced it was a wise decision.
About Ken Lewis
Lewis has been Bank of America CEO since 2001. According to Bloomberg.com:
New York Attorney General Andrew Cuomo revealed this month that Lewis had testified then-Treasury Secretary Henry Paulson may have threatened to remove the bank’s management and directors in December if the lender tried to back out of buying Merrill.
Lewis said at the shareholders meeting today that Bank of America feared significant damage to the bank and destabilization the financial system if it went public with the information about Merrill.
Bank of America stock
Over the past 12 months, Bank of America shares have plummeted 79 percent in value. However, after news of the board members remaining in their positions, the stock went up 5.3 percent today before the market closed.
Defending decisions
Ken Lewis has repeatedly stood behind his Bank of America’s decisions to purchase Countrywide and Merrill Lynch.
The acquisition of Merrill Lynch is “beginning to pay off,” and the takeover of the brokerage and Countrywide, the biggest U.S. home lender, were not “mistakes to be regretted,” Lewis said.
I haven’t seen any widely reported or specific evidence that the purchases are paying off or how. Lewis insists that despite the large declines in share value since these acquisions, more than 42 percent, the losses would have been worse without ownership of the other two companies.
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Well, it’s good to see that at least someone at Bank of America is keeping their jobs, and they had quite the round of layoffs. Somewhere in the neighborhood of about 35,000 I believe. We must do everything to preserve those ivory plated back scratchers. All kidding aside, I think that had the Merrill Lynch acquisition happened during a boom cycle, they probably wouldn’t have the same issue with it, and they’d be lauding Ken Lewis’ name from the rooftops, through gold plated megaphones. It will eventually pay off, no doubt. Good for Ken Lewis.