As if dealing with New York Attorney General Andrew Cuomo wasn't enough, Bank of America Corp. (NYSE:BAC) CEO Ken Lewis is now also the target of activist investor CtW Investment Group.
The labor-related activist investor is known around town to call for the heads of the heads of companies -- especially of banks, regardless of industry plaudits such as
Banker of the Year by American Banker, as Lewis was named for 2008.
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In its letter,
the pension fund adviser said that since the merger with Merrill Lynch & Co., Bank of America has:
- Suffered a 90% drop in share price,
- allowed Merrill to pay out $3.6 billion in bonuses, even as the firm was hemorrhaging money,
- denied
any active role in determining the size of Merrill bonuses, (a claim
subsequently contradicted by documents that have emerged in the NY attorney general's investigation),
- failed to timely disclose over $20 billion in pretax losses at Merrill and
- failed to invoke the material adverse effects clause of the merger agreement to protect shareholders from these losses.
CtW
said Lewis "either knew the scale of Merrill's losses and failed to
inform shareholders of them, or he was grossly negligent in failing to
keep abreast of Merrill's deteriorating performance." And if BofA
doesn't fire Lewis, the investor group says it will call on
shareholders to vote down re-election of Lewis, lead outside director
O. Temple Sloan and corporate governance committee chairman Thomas Ryan
at BofA's annual meeting on April 15.
CtW has been successful at ousting executives in the past, too. Last year, it
knocked off
Washington Mutual Inc.'s Kerry Killinger, chairman at the country's
largest savings and loan that lost big on subprime investments and subsequently was seized by the Federal Deposit Insurance Co. last year and sold to J.P. Morgan Chase & Co. And the
year before that, after a two-month long campaign, CVS Caremark Corp.
director Roger Headrick packed his bags. CtW said following the
takeover of Caremark Inc. by CVS Corp., Headrick, a former Caremark
director, accepted a sweet deal for Caremark insiders, including
indemnification from options backdating investigations. -
Baz Hiralal
