Posted on 04/29/2009 7:51:21 PM PDT by SeekAndFind
Kenneth Lewis has been replaced as chairman of the board at Bank of America Corp.
The company announced the change Wednesday evening, hours after it adjourned its annual meeting. In a vote too close to call during the meeting, shareholders voted 50.3 percent in favor of a resolution to separate the roles of chairman of the board and chief executive officer. Lewis formerly held both positions.
The BofA board appointed Walter Massey as the new chairman Wednesday evening. Massey, 70, has been a director for the bank since 1998 and is a member of the bank’s audit committee. He is president emeritus of Morehouse College in Atlanta and a director at McDonald’s Corp. Massey is also a former director at BankAmerica Corp., the San Francisco bank acquired in 1998 by Charlotte-based NationsBank Corp., predecessor to BofA.
Lewis will remain as the company’s president and chief executive, after the board unanimously backed him Wednesday afternoon. Lewis also maintains his seat on the board. All 18 of the directors were re-elected Wednesday by at least 60 percent of the shareholder vote. Massey, the new chairman, received more than 92 percent of the vote in his favor.
The annual meeting ended on a cliffhanger earlier in the day, when bank officials told attendees the votes on the election of directors and 11 resolutions were still being tallied. After a final vote count was confirmed sometime Wednesday afternoon, the board met to elect the new chairman. It also offered its unanimous support of Lewis as the CEO, the bank says in a statement.
But the shareholder groups that pushed for Lewis to be removed are calling the vote that removed Lewis as chairman a victory.
“A vote of no confidence was delivered,” says Bill Patterson, a representative of CtW Investment Group. “The shareholders have sent a clear, unequivocal message that it’s time for a change of leadership.”
Patterson, who with investor Jon Finger of Houston and several labor union pension funds led strong campaigns against Lewis, says the board should immediately consider fresh leadership.
“There’s a cloud over his tenure now,” Patterson says of Lewis.
But Lewis, who will celebrate his 40th year with the company this year, received plenty of support amid the critics as he presided over the annual meeting earlier in the day.
“I know you get a lot of grief from a lot of people, but please put up with it because we need you,” shareholder Joe Baker said to Lewis during the annual meeting. “We need your leadership and care.”
Other shareholders questioned the company’s acquisition of Merrill Lynch & Co. and why shareholders weren’t told about mounting losses at the Wall Street firm before they voted on the deal in December. Lewis said he was limited in what he could say about the deal due to pending litigation.
Lewis has come under tremendous fire from investors who are angered by the bank’s acquisition of Merrill Lynch. The Charlotte, N.C.-based bank (NYSE:BAC) discovered massive losses at Merrill at the end of 2008 but quietly completed the deal under pressure from the government.
When it reported fourth-quarter earnings, BofA announced that Merrill’s losses for the period were more than $15 billion and that it was taking an additional $20 billion in capital from the U.S. Treasury, which had agreed to cover losses on $118 billion in toxic assets at Merrill and BofA. The government has invested a total of $45 billion of capital into the bank.
As of Tuesday’s closing price of $8.15, the bank’s share price had dropped 42 percent in 2009 and was down 76 percent since the Merrill deal was announced in September. The bank’s stock dropped nearly 9 percent Tuesday on the news that BofA had failed regulators’ preliminary stress test and might need additional capital.
“We’re still waiting to hear from our regulators about what will be required,” Lewis said Wednesday morning in response to a question about whether the government’s preferred stock might be converted to common stock due to a capital shortfall.
BofA reported first-quarter earnings of $2.8 million, or 44 cents per share, up from $1.02 billion, or 23 cents per diluted share, a year earlier. But nonperforming assets at the company increased to $25.7 billion from $7.8 billion a year earlier. In 2008, the company earned $2.5 billion, dropping from $14.8 billion in 2007.
He had been stealing the place blind for years!
This will send BofA common up ten points before Monday.
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