Coverage from BofA shareholder meeting
The Belk Theatre, adjacent to the BofA Corporate Center, and location of the 2009 shareholder's meeting on April 29th, 2009
I have elected to vote my shares in-person this year at the Bank of America shareholder meeting this Wednesday. I have already voted the bulk of my shares, and needless to say, the dissident holders won’t like me. Either way, nothing like free tickets to a suit-and-tie cage fight between Finger and others against Ken Lewis and the board.
I’m not inclined to agree with their arguments that Ken Lewis didn’t do his job by protecting the shareholders. I think he provided them far more protection than they want, plus a long value gem in Merrill Lynch.
With the upper echelons of the money side of the government stomping on his feet, many claim he was only protecting himself and the jobs of the board members. But consider this. Had Paulson and Bernanke done what they claimed they were going to do, what was not to say that they could have used that position to tear apart the bank at the expense of the shareholders. Plus if they had done that, the bank stock would’ve plummeted anyway.
If Merrill had not been purchased, consider what effects that would’ve had on the economy, especially the banking system. When Lehman and Bear died, panicked investors rushed out to sell who they thought was the next to go. Although BoA may not have felt the worst of that pain, the banking sector, and potentially other markets, would’ve crashed. We have not seen another major bank outright fail since WaMu, and if my memory serves me correctly, Wachovia was the closest we came after that. If BoA backed out of Merrill there in December, the nasty cycle would’ve been unleashed again. Who in the hell would want to buy Merrill when one of the largest banks, that is still relatively healthy, doesn’t want it.
Finally, BoA got some long term value out of that acquisition, but the only way we are going to be able to extract that is via a smooth transition. I can vouch first hand for the abilities of BoA to make solid transitions, after being a part of two of them myself (US Trust and LaSalle bank). You can knit-pick micro issues at the execution phase, but overall they do a tremendous job of eliminating overlap, streamlining systems, integrating products, etc. into the new combined units. Countrywide, which I wasn’t a part of, has been a tremendous success, especially with the current refinance market. Many chastised Lewis for this deal too, but it is already paying its dividends, albeit to the government.
Pulling out Lewis and the other senior management at this time would be a grave mistake on the part of these shareholders. If they want to extract the most value of their ownership, then don’t pull away the leaders during mid-transition. Believe it or not, Lewis has earned a tremendous amount of respect within the bank itself. Many employees, many of whom are also shareholders, have an understanding of why they stuck to the deal, and this was even before anything came out about it (many theorized it, based upon the morals of Mr. Lewis).
And I guess, finally, I’m tired of hearing about Lewis being chastised for being an outstanding corporate citizen. By sticking with the deal with his feet pinned, he did a great deal to help our economy out, and in the end, provide a good day for many of the investors such as myself who found new opportunity to own some equity of BoA. This is an outstanding corporation that will continue to churn out profits for many more years to come.
So for all of you BoA shareholders out there, vote against these dissident views. They are held by frantic tunnel-visioned companies, activists by their own name, yet history proves that activist investors are rarely the people we need making decisions.
