By Ieva M. Augstums and Mitch Weiss
Associated Press
CHARLOTTE, N.C. — Bank of America Corp.’s annual meeting was the angry affair that most people expected, and shareholders’ ire only increased when the company delayed the release of a shareholder vote on whether Chairman and CEO Ken Lewis can keep both his jobs.
Shareholders did vote to re-elect the entire 18-member board including Lewis, according to a person with knowledge of the vote tally who spoke on condition of anonymity because he was not authorized to disclose the results. But bank executives said at the nearly four-hour meeting they needed more time to count the ballots for the 11 proposals that were put to a shareholder vote — including a shareholder proposal to strip Lewis of his chairman’s title.
The company said it was aiming to release the vote totals later today, but the announcement was met by boos and some in the audience of more than 2,000 got up to leave although the meeting was continuing.
Big investors including California’s employee pension fund have called for shareholders to oust Lewis and his fellow directors at the meeting. And shareholders lined up early in the gathering to speak at microphones, and many hurled criticism at Lewis and the Bank of America board, especially for the company’s Jan. 1 purchase of struggling Merrill Lynch &Co.
“I find it incredible you didn’t have the guts to stand up to the U.S. government,” said Judith Koenick of Chevy Chase, Md., who said she lost thousands of dollars when BofA shares plunged after the Merrill Lynch purchase.
The government pressured Bank of America into buying Merrill Lynch during the same weekend in September that another investment bank, Lehman Brothers Holdings Inc., collapsed, setting off one of the most intense periods of the financial crisis.
On his way into the meeting, shareholder John Moore, of Charlotte, said, “I think now is the time for Mr. Lewis to resign. We thank him and the board for their service.”
But one shareholder who spoke early in the meeting was also complimentary of the CEO.
Joe Baker, who said he was from Mississippi, said, “We need Ken Lewis and his board in control.” The audience applauded.
Lewis also was greeted by applause as he took the stage. In his remarks, he defended the company’s acquisition of Merrill and another troubled company, mortgage lender Countrywide Financial Corp.
Lewis said the companies are providing “the positive counterbalance to our traditional banking businesses, which at this point of the business cycle are under much more stress from rising credit losses.”
“Countrywide and Merrill Lynch are two of the most important reasons Bank of America is the most profitable financial services company in the United States so far this year,” Lewis said. “Today, I can state without reservation that these acquisitions are not mistakes to be regretted. Both are looking more and more like successes to be celebrated.”
The Charlotte-based banking giant and Lewis have been under intense scrutiny because Bank of America is one of the biggest recipients of government bailout money and because $15 billion in fourth-quarter losses at Merrill Lynch turned out to be much higher than anyone expected.
Shareholders who have been calling for Lewis to resign or be dismissed as chairman and CEO are also irate over the precipitous drop in the company’s stock price. Bank of America has fallen 42 percent since the beginning of the year, closing Tuesday at $8.15 and rising to $8.76 this afternoon in a rally stock market. But shares fell as low as $2.53 in late February.
In his remarks today, Lewis said, “I know the Merrill deal has played a role in the decline of our stock price. But I do not believe it is solely responsible for its decline.” He said every major commercial bank in the country is under pressure.
A number of investment groups have campaigned for other shareholders to vote against the re-election of Lewis and other board members at the meeting. However, it is possible that at the meeting or at some point in the near future Lewis might lose his title as chairman while remaining CEO — a change that has been made at other troubled companies.
On Tuesday, the California Public Employees’ Retirement System said it would vote against re-electing all 18 Bank of America board members, including Lewis. CalPERS, the largest U.S. public pension fund, holds about one-third of 1 percent the bank’s outstanding shares.
Bank of America has received $45 billion in government aid as part of the Troubled Asset Relief Program, and additional guarantees backing hundreds of billions more in risky investments after it took over Merrill Lynch in January.
On Tuesday, two people familiar with the matter said the Bank of America and Citigroup Inc. will need to raise more capital if they can’t convince regulators that “stress test” results were mistaken. Results of the tests, which are designed to determine if the banks can weather more economic turmoil, are expected to be released next week. BofA and Citi are preparing their appeals of the government’s assessment, said the people, who spoke on condition of anonymity because everyone involved in the process has been ordered not to discuss it
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