Bank of America Shareholders Strip Lewis of Chairman Role

By Mike Caggeso
Associate Editor
Money Morning

Bank of America Corp. (BAC) shareholders cast 50.34% of their votes in favor of stripping Kenneth Lewis of his chairman title.

The historic vote was cast at the BofA's annual shareholders' meeting for a resolution to change company by-laws so that the offices of chairman and chief executive are separately appointed.

Shareholders voted 67.33% in favor of Lewis keeping his title as chief executive.

"The board unanimously expressed its support for Lewis to continue in that role," Bank of America said in a statement.

Lewis' undoing as chairman is largely the result of shareholder grumbling over his decision last year to acquire Merrill Lynch & Co. Inc. (MER) - as well as his failure to disclose information about Merrill's condition before Bank of America scooped it up.

The merger, originally valued at $50 billion, was announced on Sept. 15, about an hour before Lehman Brothers Holdings Inc (LEHMQ.PK) went bankrupt. Afraid the collapse of Merrill Lynch would cause further deterioration of panic-stricken markets, the government helped facilitate the deal with $25 billion of capital from the U.S. Treasury Department's $700 billion Troubled Asset Relief Program (TARP).

In his defense, Lewis testified to New York's attorney general that Federal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Henry M. Paulson pressured him not only to move ahead with the Merrill merger despite reservations, but to also stay quiet about the mounting losses at the crumbling investment bank

But it wasn't enough to appease shareholders, who began rallying around fellow shareholder Jerry Finger and his campaign to oust Lewis from his post.

Finger's bullhorn must have blared fairly loud considering he and his family hold only about 1.5 million of Bank of America's shares, which is about 0.02% of total outstanding shares.

Lewis didn't comment directly on the vote, but touched on the subject in comments on efforts to rebuild the company after the subprime fallout and ensuing financial crisis.

"We are building this company and managing for the long term. I continue to believe we have built the best financial company in the industry, and that our results over the long term will bear that out," Lewis told shareholders.

Lewis dually acknowledged the difficulty of running a bank in 2008 and the "heavy burden" shareholders have carried throughout.

"My strong feeling is that organizational integration - and a renewed focus on organic growth - will be the almost exclusive focus of our efforts in the coming years," he said.

Massey Fills In

After Lewis' removal, the board elected Walter Massey as Bank of America's new chairman.

Massey has been a director on Bank of America's executive board since 1998 and is a member of its Audit Committee.

Massey is also a director of McDonald's Corp. (MCD), and a former director of Delta Airlines Inc. (DAL), Motorola Inc. (MOT) and BP plc (ADR:BP).

From 1995 to 2007, Massey served as president of Morehouse College. Before then, President George H.W. Bush appointed Massey director of the National Science Foundation - a government agency that supports math, science and engineering research and education.

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