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March 05, 2009

Union investment group to Bank of America director: The CEO resigns, or we fire him, and you

A major union investment group demanding that the Bank of America fire its CEO and chairman Ken Lewis. 

The executive director of the Change to Win Investment Group sent a letter to the lead director of the Bank of America Corporation on Thursday demanding that Lewis step down.

If Lewis doesn't leave voluntarily, the letter warned, the CTWIG will launch a campaign to unseat him...and the lead director, and the chair of the corporate governance committee:

Absent prompt action to remove Mr. Lewis, we will have no choice but to call upon BAC shareholders to join us at BAC’s upcoming annual meeting in voting against Mr. Lewis, Thomas Ryan, as chair of the Corporate Governance Committee responsible for CEO succession, and you as lead independent director.--William Patterson, Executive Director, CTWIG [03/05/09]

CTWIG wants Lewis out because the Bank of America imploded on his watch, losing about $900 million of CTWIG's members' money in the process.

The group alleges that Lewis squandered shareholders' money in a reckless bid to acquire Merrill Lynch. Since Lewis announced the merger five months ago, BoA stock has lost 90% of its value.

Moreover, the New York Attorney General's office is investigating whether Lewis lied about his role in doling out $3.6 billion in bonuses to Merrill Lynch employees.

It's not clear how many votes CTWIG would need to make good on its threat to oust the three senior executives named in the letter.

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Comments

It's also unclear why Change to Win thinks the BoA problems are due to the merger, and not the fact that all banks in the US are imploding. Are they demanding the same changes of Citibank, whose governance has been far and away the worst among the major banks?

I don't know if CTWIG invested any money in Citigroup. The only reason they might be able to unseat Lewis is because they own a lot of stock in BoA. CTWIG isn't committed to saying that all BoA's problems are due to the merger, just that the merger is a firing offense. Lewis is under investigation for lying about billions of dollars worth of bonuses. I think it's time for him to go and if CTWIG can expedite the process, brilliant.

I suspect that BAC would probably have done fine irrespective of Mr. Lewis' competence or lack thereof, had the world economy not melted down. I have no idea what sort of a manager the guy is, but doing nothing to prevent Merrill Lynch from splurging on bonuses given the current climate was pretty boneheaded.

In any case, it's nice to see the peasants at the gates with pitchforks and flails.

Owning less than one tenth of one percent of BAC shares, this is a cheap stunt.

btw, Dr. B. I do hope you stop blathering while performing fellatio. Now "lathering" and "slobbering" are good, but blathering on about topics you know nothing would be *extremely* distracting

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