Tuesday, May 05, 2009

BAC and C Need to Turn the Page with New Leaders

Bank of America (BAC) piled too much on its plate in terms of acquisitions -- especially the most recent ones that are so much larger than the little retail branch acquisitions that have been their bread-and-butter through their history.

However, there's a simple answer to their CEO question: he should leave. Imperial CEOs and their lackeys like to create this myth at times of stress and pressure that they are "indispensible men." Some shareholder during yesterday's BAC annual meeting even got up and asked the audience of shareholders: "If not Ken, who's going to lead us?" [To which he got a hearty applause]

I think there's an abundance of managerial talent available -- outside the bank if not inside the bank. The best thing for BAC shareholders (and for the ones of another embattled bank, Citigroup (C)) would be for a change at the top. Maybe they're good guys who are a victim of circumstance, but you would have to acknowledge that Ken Lewis and Vikram Pandit have failed their test of leadership in the last 18 months. It's time to turn the page and move on.

I would argue that Lewis has no credibility now after yesterday's vote to stay on as CEO. People need to realize that most of the BAC shares held by brokers were automatically counted towards his re-election yesterday and for him to keep the Chair and CEO titles. Had those votes not counted either way -- as will be the case thanks to the SEC starting in 2010 -- the votes against him (and the other directors) would have likely been 15 - 20% higher than the numbers reports.
This means a real majority of shareholders voted down the re-election of several BAC directors yesterday and almost three-quarters opposed Lewis keeping the Chair title.

That's not a mandate to continue leading. It's time for Lewis and Pandit to go.

Position: None.

Originally published in RealMoney.com on 4/30/2009 7:57 AM EDT

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