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Bank of America’s Ken Lewis battles for job

By Carol Eisenberg

April 28, 2009 at 9:47am

The son of a soldier and nurse from small-town Mississippi, Ken Lewis likes to boast that he has worked since he was 12 years old, selling greeting cards door-to-door and pumping gas, among other things.

On Wednesday, the 62-year-old bank chief will need every skill he has picked up along his long climb to the top, just to hold onto his job as chairman and CEO of Bank of America.

Lewis is expected to face furious shareholders at the bank’s annual meeting in Charlotte, North Carolina, many of whom are demanding his blood for the bank’s costly purchase of troubled Merrill Lynch last year, not to mention the 80-percent decline in the bank’s stock value.

Kenneth D. Lewis
Kenneth D. Lewis

Three of the nation’s top investor advisory firms - RiskMetrics, Glass Lewis and Egan-Jones Proxy Services - have recommended a vote to remove Lewis as chairman. State pension funds in California, Connecticut, Illinois and New Jersey are voting their shares against him, as are the Florida state board of administration and several union investment funds.

“Will he stay in his job? I kind of go back and forth,” Jason M. Goldberg, the banking analyst at Barclays Capital told the New York Times. “From the people we talk to, we’re definitely hearing mixed things.”

Lewis, who worked his way through Georgia State University with jobs as a shoe salesman and an airline reservation assistant, is not the first bank chief to face intense criticism as a result of falling stock prices amid the economic meltdown.

But his fall from grace has been especially dramatic. Just last year, he was named banker of the year by US Banker magazine.

But then came the hasty merger with Merrill Lynch last September, just as Lehman Brothers collapsed and the economy went into a tailspin, resulting in $16 billion in fourth-quarter losses for Bofa. Almost half of the $45 billion that BofA sought in federal bailout funds has been to digest Merrill.

The payment of $3.6 billion in bonuses to Merrill executives before the brokerage firm’s big fourth-quarter losses were revealed also provoked fury.

Still, Lewis, who has been in the job since 2001, does appear to have several major constituencies supporting him. Brokers often cast votes on behalf of clients who do not vote themselves, and they usually side with management.

But even if he survives the two separate votes to strip him of his chairmanship, that will hardly be the end of his troubles. Angry shareholders could still remove some critical allies from the board, including O. Temple Sloan, the Charlotte company’s lead independent director.

And it’s not only Lewis’ relationship with shareholders that is considered problematic.

His testimony to New York Attorney General Andrew Cuomo that he was pressured by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to complete the Merrill Lynch purchase - and even more explosive, to keep details about the company’s fourth-quarter losses quiet - has not endeared him to federal regulators. Paulson has denied pressuring Lewis, or asking him to remain quiet about Merrill’s losses.

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