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Ken Lewis' ouster as Bank of America chairman urged

CEO Lewis should lose his BofA board post as part of a major shake-up, two shareholder advisory firms say, joining a growing chorus.

April 18, 2009|E. Scott Reckard

Two large advisory firms for institutional investors recommended on Friday that shareholders vote to oust Bank of America Corp. Chief Executive Kenneth Lewis as chairman of the bank.

In the latest fallout from Lewis' $50-billion takeover of loss-drenched Merrill Lynch & Co., the investor advisors RiskMetrics Group and Glass Lewis & Co. also supported a shareholder proposal to require different people to hold the posts of chairman and CEO at BofA.

Both firms opposed the reelection of several board members in addition to Lewis, including lead director O. Temple Sloan. Glass Lewis said Sloan "undeniably failed" in his role, largely because he did not warn of huge potential losses at Merrill before the acquisition went to a shareholder vote last December.

A bank spokesman said Lewis and Sloan would not comment on the "vote no" campaigns against them. Shareholders will vote at Bank of America's annual meeting in Charlotte, N.C., on April 29.

The Merrill acquisition, which closed Jan. 1, has been tarnished by the Wall Street firm's payment of $3.6 billion in bonuses for the fourth quarter even though it reported a $15.4-billion net loss in the period.

Merrill moved the bonus payments to December from its usual January payout. Its $22-billion pre-tax loss for the quarter was nearly as much as its entire $24-billion profit during the three peak boom years of 2004 through 2006.

Lewis has said he could not stop the payments because Merrill was still independent when they were made.

Some shareholders, including activist Jerry Finger and CtW Investment group, an advisor to union pension funds, had already been urging Lewis' ouster.


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