That’s right. SEIU won this battle against the board, by getting this proposal through with right at 50.34% of the vote. The recount makes absolute sense now, given the .6% difference. But wow, I honestly didn’t think it would make it. I figured it would be close, but, wow. Coincidentally, this is the first time the by-laws of an S&P 500 company has ever been amended through a proxy vote.
The good news is that the entire board was re-elected by a comfortable margin, according to the PR Newswire. Lewis is still the Chief Executive Officer, and given that everything else went through, there shouldn’t be too much disruption in the leadership of the bank. Dr. Walter E. Massey has now replaced Lewis as the Chairman.
Why am I so concerned about this? I mentioned earlier that I had points I wanted to address but wasn’t able too. Well, here’s my points:
- As was pointed out during the meeting, “you don’t change captains in the middle of a hurricane or a tornado, and right now we are in a hurricane and a tornado.”
- Beyond the current economic crisis, Bank of America is in the midst of two major transition projects. Countrywide, which is winding down some, and Merrill Lynch, which is just kicking off
- Bank of America, under Ken Lewis, has a strong history of successful integrations of acquired companies into the format of Bank of America. This is achieved by stable senior management, identifying key factors, and ensuring their respective teams are on the mark
- Merrill Lynch is a massive acquisition and requires an all out effort to be realized fully. The success of this project is directly linked with stable leadership.
- Ken Lewis and his team have earned a great deal of respect from a majority of the employees of Bank of America (at least from what I have witnessed from across the country, meeting bank associates in 10 different states, at about 40 or more different sites)
- Disrupting senior management at this time would be a poorly calculated move. We risk devaluing our shares off of a purely emotional move.
- As for the accusations of not looking out for the shareholders, until all of the facts are fully known, we cannot make a sound decision regarding those actions. Nothing is cut and dry, and this is America. Innocent until proven guilty.
What it all boils down to is that the last thing we need to do at this particular moment is to shake things up to the point that we inadvertently hurt ourselves. There is a time and a place for this, and while the shareholder meeting might be the right place, the timing is too soon. We, at a minimum, need to ensure that we can fully realize the potential of Merrill Lynch before we make rash decisions. Ken Lewis has a proven track record of making these acquisitions work, which says a lot about him and his team. These transitions are extremely complicated and time-consuming. Transitions were my favorite projects by the way, the only true challenges I ever saw on the job. I worked on the Print Optimization project for the US Trust transition (which after 6 years of so, Charles Schwabb STILL couldn’t integrate properly), and trained technicians in Chicago for BAND refresh (hardware upgrade) at the LaSalle bank transition. I’ve seen this stuff in action.
Irregardless of my personal experiences, it is well proven that these things are difficult to do, and even more difficult to do right. The current leadership of Bank of America has excelled in the category, and at the current moment, this is the talents we need on board. So we need a wait at least until next year, or the year after that, before we even begin to consider forcing Lewis out. Why cut off your nose to spite your face?
As a footnote, for the record, I am a strong supporter of Ken Lewis. He may not be perfect, but he’s a damn good CEO, and in the world of the biggest banks, BofA may have the highest standards of ethical and moral practices out there. Not saying I agree with everything, but given a corporation with the size and scope of this place, few can compare. Ken Lewis does have a drive to do the right thing, which is why I think he pushed ahead with Merrill. Had Merrill been left hanging in December, the shockwaves through the system would have been tremendous, and may have claimed even more casualties along the way. If the shareholders of the bank have a problem with putting our neck out there to protect all parties involved, then they may need to begin to question their own American spirit. Could the whole thing have been handled better? Probably. Should Ken Lewis has reported the larger than expected losses? Probably. Do I regret BofA buying Merrill? Absolutely not. In the long run, we the shareholders will have a lot to gain through the additional revenue generation of Merrill Lynch. Not to mention the pride and respect for being able to take on the risk to save everyone’s asses.
I guess I do have one other final thought. Some of the individuals who spoke, especially the olders one who were complaining, because it was affecting their retirement. Maybe next time they should read the damned disclosures, and maybe pay attention to the single most common piece of advice about saving for retirement. The older you get, the further away from equities you should be. If you’ve lost $75,000 in retirement because of Bank of America, and you are old enough to be able time to retire (or already retired), then you’ve got WAY too much money tied up in equities. Way too much. So stop your bitching because you refused to read basic, sound advice, don’t bitch because you refused to read a word on the disclosure statements, letting you know the risks of owning equities, that all they can show you is past performance, which does NOT guarantee future performance in any way, shape, or form.