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UPDATE 3-BofA lead director Sloan steps down
May 29, 2009 / 9:02 PM / 8 years ago

UPDATE 3-BofA lead director Sloan steps down

* Sloan sat on compensation, governance committees

* Sloan re-elected as director at annual meeting in April (Adds shareholder reaction, after paragraph 14)

By Elinor Comlay

NEW YORK, May 29 (Reuters) - Bank of America Corp’s (BAC.N) lead director Temple Sloan resigned from the largest U.S. bank’s board of directors on Friday.

Sloan’s departure is a blow to Chief Executive Kenneth Lewis, whom shareholders ousted as chairman of the bank’s board at the annual meeting last month.

Sloan was a member of the board of directors that originally made Lewis CEO.

With the government having given Bank of America more than $45 billion of capital, the U.S. is seen has having great influence on the bank’s management.

U.S. officials have urged the bank to revamp its board and bring in directors with more banking experience, the Wall Street Journal reported earlier this month. Citigroup, the only other bank to receive $45 billion from the government, faced similar U.S. pressure to add banking experts to its board.

If Bank of America’s troubles mount, many analysts and portfolio managers reckon that Lewis will be pressured to resign.

Investors had criticized Sloan, who had been on the bank’s board of directors for 13 years, for not doing more to prevent Lewis from buying Merrill Lynch & Co Inc.

The bank said in a statement Sloan’s resignation is effective from May 26. In a filing it said Sloan’s departure was not the result of any disagreement with the company.

Three major advisory groups counseled investors against reelecting Sloan, a chairman and former chief executive of auto parts company General Parts International, as a director at the bank’s annual meeting in April.

Investors re-elected Sloan to the board, but by the narrowest margin of any of the bank’s directors, with 37.4 percent of votes cast against him.

Shareholders at the meeting criticized the bank’s 18 directors for failing to disclose huge losses that Merrill was amassing at the end of last year, even as it was paying out $3.62 billion in bonuses to employees.

Sloan, 70, was chairman of the executive committee and the compensation and benefits committee. He also served as a member of the bank’s corporate governance committee.

Shareholders narrowly ousted Lewis as chairman by voting 50.34 percent in favor of electing an independent board chairman compared with 49.66 percent against.

MASSEY‘S POWER ON THE RISE

Walter Massey, a longtime board director who replaced Lewis, has been examining the board’s committees and considering potential successors to Lewis, the Wall Street Journal reported earlier this month.

“It appears that Massey is exerting some independence as chairman and I think that would naturally reduce Temple Sloan’s influence on the board,” said Jonathan Finger, who along with his father run Finger Interests and led a campaign to split the chairman and chief executive roles at the bank. More board changes are likely to follow, Finger said.

Jerry Finger sold Charter Bancshares Inc to Bank of America predecessor NationsBank in 1996 and the family control about 1.1 million shares of the bank.

The U.S. Treasury told the Charlotte, North Carolina-based bank that it needed to plug a $33.9 billion capital shortfall after it assessed the capital needs of all banks.

The Charlotte, North Carolina-based bank has said it has raised close to $26 billion of equity capital this month.

It is also under pressure to repay $45 billion in taxpayer funds received since last fall, and the bank has said it would like to begin repaying this money by the end of the year. (Reporting by Elinor Comlay, additional reporting by Dan Wilchins; editing by Carol Bishopric)

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