NEW YORK Bank of America Corp shareholders voted to oust Chief Executive Kenneth Lewis as chairman of the board on Wednesday after months of mounting criticism of his stewardship of the largest U.S. bank.
The bank's board "unanimously" expressed support for Lewis to stay in the CEO post despite the fact that shareholders "narrowly" approved a proposal to require an independent chairman.
Lewis, who will remain chief executive, will be replaced in the chairman post by Walter Massey, a director of the bank's board since 1998 and also a director of McDonald's Corp.
The following is reaction from industry analysts and investors:
JEFFREY SONNENFELD, PROFESSOR AND HEAD OF THE YALE CHIEF EXECUTIVE LEADERSHIP INSTITUTE
"It's a shame that it took this near death experience to bring a board to fully engage and do the right thing- and this happens to be a board filled with some tremendous leaders.
"There are too many directors, and that dilutes the voices of the most knowledgeable directors."
"Especially in a time of crisis, it's important to point out that Ken Lewis is a honorable CEO with a storied career, who had a very bad last year and lost his legitimacy to lead."
"Lewis may have a lot of litigation ahead of him in the aftermath of his failure to disclose full information with regard to the bonuses and known value of Merrill Lynch when they were buying it."
"It's a step and it's a pretty big step -- the board voted its conscience, with the true interest of owners, rather than blindly supporting management."
CAMPBELL HARVEY, PROFESSOR OF FINANCE, DUKE UNIVERSITY:
"We knew that it was going to be close, but this is an unambiguous vote of no confidence."
"Whether he chooses to remain as CEO or not, the dominant influence that he had at Bank of America is now a thing of the past."
"Corporate governance 101 says that you should have a non-executive chairman. That was not a situation at Bank of America. It was a situation where this firm would not be in existence as we know it if it wasn't for government bailout money. It kind of makes sense that there should be some change in governance."
"Shareholders were able to turn the tide here."
"This is such a high-profile event that it will spill over to other situations. Whether they are at financial institutions or just any U.S. corporation, it will be much more difficult for a CEO to be chairman at the same time."
RICHARD SICHEL, CHIEF INVESTMENT OFFICER, PHILADELPHIA TRUST CO.:
"He'll still be able to manage the bank because that was not taken away. Shareholders got their vote and sent a clear message they weren't happy with how Merrill Lynch was handled.
"It maybe energizes shareholders so that when they are unhappy, they can at minimum send a message. I don't think it will have any effect on the price of the stock."
ELEANOR BLOXHAM, CHIEF EXECUTIVE OFFICER OF THE VALUE ALLIANCE, A CORPORATE GOVERNANCE ADVISORY FIRM
"We are going to see more of this separation of leadership roles. When you think about it, there's enough work to be done as CEO and running the board requires a fair amount of effort in and of itself and separating that oversight makes a lot of sense."
"Although shareholders are not going to universally do this in every company, I think in this particular situation it's a referendum related to their concerns about how the company has been run and the level of oversight so far."
"I would think that the shareholders would continue to voice their concerns about his leadership and there is likely to be calls for the board to take a new approach in terms of the way in which the company is being run."
"I really think that at some point we're going to get to a point this is more common practice (splitting CEO, chairman), when it becomes less of a showdown."
RALPH COLE, PORTFOLIO MANAGER, FERGUSON WELLMAN CAPITAL MANAGEMENT IN PORTLAND, OREGON:
"It's kind of the first step toward the end for Lewis. It shows there's at least some constituency that's not happy with his performance. I just don't think he's going to last.
"He's become such a lightning rod. He's been at the helm of Bank of America through all this, and he did get jerked around by the Treasury in December, but all the wounds before then were self-inflicted. You'd be hard pressed to say Bank of America has done a great job managing themselves. People do have a right to be concerned about his leadership.
"Ownership is so diluted in big companies that it's very hard to organize and truly revolt against directors or managers at a large company."
(Reporting by Dan Wilchins, Phil Wahba, Paritosh Bansal, Chris Sanders and Elinor Comlay)