Bank of America board under scrutiny

By Laurie Bennett

January 28, 2009 at 10:17am

As Bank of America investors question the rocky merger with Merrill Lynch and the events that led to John Thain’s firing last week, the company’s directors are feeling unaccustomed pressure.

Some investors, including the Service Employees International Union, are calling for the dismissal of the bank’s CEO, Kenneth Lewis. Critics say Lewis has had free rein, with little interference from the board.

“This board, historically, has been viewed as a board that was there on paper,” Charles M. Elson, a corporate governance expert at the University of Delaware, told The New York Times.

The company is expected to add three new members during its meeting Wednesday, bringing the total membership to 20. The new directors, the Times reports, are former IRS director Charles O. Rossotti, former Miller Brewing exec Virgis W. Colbert and Joseph W. Prueher, a retired Navy admiral and former ambassador to China.

Current members include former Gen. Tommy Franks; Monica Lozano, publisher of La Opinion; and Patricia E. Mitchell, former PBS chief.

Strong cross-loyalties exist between the board and the leadership of several other companies, a practice generally frowned upon by corporate governance principles.

O. Temple Sloan Jr. is a director of both Bank of America and Lowe’s Companies. Lewis and bank director Paul Fulton are former directors of Lowe’s. Former Lowe’s chairman Robert L. Tillman is also a Bank of America director.

The bank also has several connections to the Massachusetts utility NSTAR. Bank of America director Thomas J. May is chairman of the utility, while Gary L. Countryman and Charles K. Gifford sit on both boards.

While the Wall Street Journal reported today that Lewis still had backing from the board, others suggest that support is waning with continuing losses. The bank lost $1.79 billion in the fourth quarter - excluding Merrill’s losses of $15.3 billion.

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  • #1.   SomeRandomGuy 03.02.2009

    I think this misses an important link. I served under General Franks around 15 years ago when he was a field grade officer and I was an enlisted man. Plus I used to have an account with Bank of America when I was in college. I also sometimes drink Miller Genuine Draft, and watch PBS - a really unusual connection that probably merits further scrutiny. So I’m really in the thick of things when it comes to the financial sector meltdown, and I’m surprised you didn’t explore that connection - I think you’re really missing something sinister here.

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