Lewis out as Bank of America chairman, remains CEO
— -- Lewis will remain a director and CEO of Bank of America with the board's unanimous support, the bank said in a statement. Walter Massey, an academic who has served on BofA's board since 1998, will replace Lewis as chairman.
Shareholders' approval of an independent chairman — by a razor-thin margin of 50.3% to 49.7% — comes at a difficult time for BofA. The bank faces ballooning charge-offs on its consumer loans and sharp condemnation over how it handled the merger with Merrill Lynch.
Critics say the bank failed to tell shareholders about Merrill's deteriorating financial condition even as it lobbied the government for aid so it would be able to complete the deal.
"They were not upfront with shareholders," says Clark McKinley, a spokesman for Calpers, the California employees' retirement system that unsuccessfully voted against re-electing Lewis and 17 other directors.
At the company's four-hour annual meeting, Lewis defended BofA's purchases of Merrill and mortgage lender Countrywide, saying the deals "are not mistakes to be regretted. Both are looking more and more like successes to be celebrated."
Yet the removal of Lewis as chairman sends a clear message to the banking industry, says Claude Hanley, a partner at Capital Performance Group, a management consultant. "Shareholders are really unhappy with what they perceive as improper governance," he says. "There's a sense that companies took risks that weren't fully thought through."
BofA is among a handful of banks that have split the roles of CEO and chairman. A year ago, Wachovia — now part of Wells Fargo — removed Ken Thompson as chairman, and then soon after replaced him as CEO. However, also on Wednesday, Morgan Stanley's shareholders voted against splitting the chairman and CEO roles.
Having different executives as chairman and CEO can give the public more accountability, says Christopher Whalen, a co-founder of Institutional Risk Analytics, a bank research firm. "In a big public company, it is often a good idea to have a chairman who is focused on governance and on the performance of the CEO," says Whalen.
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