BofA CEO keeps one title, loses another
Posted April 29, 2009 5:12 p.m. EDT
Updated April 29, 2009 8:09 p.m. EDT
CHARLOTTE, N.C. — Ken Lewis, a man who thrived on scoring the next big deal, has been sunk by one.
Lewis, chairman and CEO of Bank of America Corp., lost some of his power Wednesday when shareholders voted to split his two titles. And he can blame it on his bank's acquisition of Merrill Lynch & Co.
Most of the shareholders who spoke at Bank of America's annual meeting Wednesday questioned Lewis' decision to agree to a government-brokered purchase of the struggling investment bank. The deal put Lewis, chairman and CEO of the Charlotte-based bank since 2001, on shaky ground.
All 18 Bank of America directors, including Lewis, were re-elected by a "comfortable margin," spokesman James Mahoney said after the meeting, although final vote results have not been made official by the bank.
Another vote on splitting the chairman and CEO jobs at the bank – Lewis' jobs – resulted in a title change for Lewis. He will remain CEO, but was ousted as chairman.
An aggressive dealmaker who has already snapped up big bank companies including FleetBoston Financial, MBNA and Countrywide Financial, Lewis this time didn't buy a financial winner when he took on Merrill Lynch. After the deal was sealed, Merrill Lynch announced $15 billion in fourth-quarter losses. Lewis has also been criticized for allowing bonus payments to Merrill employees before the takeover was completed on Jan. 1.
The Merrill Lynch acquisition was supposed to transform the bank into a business befitting its name. A strong investment bank has been the only missing piece for Bank of America; a series of bad bets in its investment banking unit over the past year and a half helped slash companywide profits.
"That there is even a question of if the CEO of the largest bank in America should be in charge demonstrates the level of anger in the country right now," said Michael W. Robinson, senior vice president of Levick Strategic Communications.
Robinson said of Lewis and the country's dissatisfaction with the ongoing problems at Bank of America and other financial companies, "it's not to say he deserved it, but a lot of anger and that blame has to go somewhere."
Robinson added that stripping Lewis, 62, of his title as chairman, will "absolutely" make his job more difficult. It forces him to regain trust and support of shareholders, he said.
Getting back approval from the bank's investors will only come if Lewis can lay out a clear roadmap for what Bank of America will look like, in detail, in the future. Discussing the future must include specifics about how the bank plans to repay the government and also incorporate what Bank of America expects from the Countrywide and Merrill operations it acquired over the past year.
"He must articulate a vision and make it compelling and realistic," Robinson said. "He has to be the man with the plan."