Although he remains CEO of Bank of America®, Kenneth D. Lewis was stripped of his position as BofA’s Chairman of the Board in a meeting attended by some 2,200 shareholders last Wednesday. The decision was reached after a close vote of 50.34% to 49.66%, to separate the duties of the chairman from that of CEO.
Board member Walter E. Massey, president emeritus of Morehouse College in Atlanta, was elected by the board to replace Lewis as the bank’s Chairman. An announcement that came later after the vote also stated that all 18 directors of Bank of America® including Lewis, have been re-elected by a good margin.
Being removed from the title of board chairman was definitely a startling turn of events for Lewis, 62, who helped build Bank of America® into the banking giant that it is today, and who, a year ago, was at the top of his game.
During the course of the meeting at the Belk Theater in Charlotte however, it became apparent that one of the main issues that led shareholders to doubt his leadership capacity was the acquisition of beleaguered investment bank Merrill Lynch last September.
Although Lewis is known to be a visionary and a veteran dealmaker having already acquired big bank companies previously including Boston Fleet Financial, MBNA, and Countrywide Financial, the rushed deal with Merrill proved to be a bad call as Merrill Lynch announced a $15 billion dollar fourth quarter loss shortly afterwards. Matters became more complicated for Lewis when it was also found out that he allowed billions in bonuses to Merrill executives prior to finalizing the takeover on January 1.
BofA shareholders also claim that the series of bad decisions made by Lewis resulted in the bank having to accept not just one but two bailouts from the federal government which further put the bank in a negative light and caused Bank of America® shares to plunge.
For his part, Lewis addressed the audience and defended the management’s decisions to acquire both Merrill Lynch and troubled mortgage company Countrywide Financial saying that these acquisitions are “two of the most important reasons Bank of America® is the most profitable financial services company in the US so far this year.”
As bad as this all sounds now, the worst could still be coming for him. With the banks’ stress test results due for release within the next few days and more credit-related losses expected in the next few months, the BofA CEO may have a tough time just hanging on to his job.