munky.org|v3.0

Bank of America Corporate Center - Charlotte, nc

I just got back from the 2009 annual Bank of America shareholder meeting, which started at 10AM at the Belk Theater, adjacent to the Bank of America Corporate Center. After some confusion as to which line was which (me and several other shareholders ended up standing in line with associates), the theater was full to the brim, and it was standing room only outside of it, watching the meeting live on TV.

Right at the end of the 3 board proposals, I managed to get in on the balcony. What a show it was. The speakers were extremely diversified, ranging from pension fund managers, risk analysts, the head of habitat for humanity and the united way, a retired fish peddler, an incoherently slow woman, a 90+ year old man, and the battle between two older Jewish women: one rich, one not. Needless to say, the reactions were diversified as well. Some were accusatory, some quoted Thomas Jefferson (more on that one in a minute), a modified biblical verse, to praise and adulation for the Chief Exec and Chairman.

Let me begin with some of the harsher remarks. At some point, a representative of probably a Georgian aristocrat (who else sends personal representatives?) spoke, addressing with the words and language of Thomas Jefferson. He equated the banks with aristocratic control, with power being in the hands of but a few. Unfortunately, as much of a fan of Jefferson that I am, these comments were well out of place. As another speaker mentioned, Hamilton or Lincoln would be more relevant. Plus I found the whole think a hypocrisy, given the man sent his own personal representative, and it was written and presented with an air of snobbishness.

Then there was our favorite not so rich Jewish lady. More than one person in that audience was ready to disconnect her mike. She would go on and on, go off topic, ask the same questions repeatable, make arguments with false information, etc. She was wearing a shirt that said “Fire them all!!! Kenneth Lewis & the board of directors!!!” She even brought a small sign that read “FIRE LEWIS!!! FIRE THE BOARD OF DIRECTORS!!!” Every single person in that audience was fed up with her, and she was the only one in the entire event (that I noticed) had even been interrupted.

One of the more aggravating shareholders to speak. I'm all for free speech, but can someone get her some thorazine? Even the Lewis opponents were moaning

To diverge on this lady for a second, I just figured I;d throw in one of Lewis’ responses. She was misreading the proxy statement, accusing Mr. Lewis of lying about his executive compensation. Lewis has a base salary of $1.5 million, plus any bonuses and options he is entitled to. Last year he received $0 compensation beyond his salary. Yet she saw 2008 and $10 million, and went into a fire and brimstone accusation process. Finally after sitting down, THEN coming back up again on the same point, he managed to get her to understand. Then she said he should go ahead and donate it all to charity, but he was too cheap to do that. That’s when he came back “Because of my pledges, I am already donating more than I am made.” +1 for Lewis, -1 for the old lady. The crowd cheered.

Yet others were not so tough on him. Some who wanted him out were still thankful for his years of service to the bank and praised him on the assets and talents he brought to Bank of America, although the believe his time has passed. Then there were a number of supports, including one man who told Mr. Lewis to “look behind you, we are all standing there.” Another gentleman asked him to keep standing there amid all of the criticism and attacks, because we need him to lead us out.

The reoccurring theme amongst supporters were the need to maintain leadership during this storm. As one lady, MRS. Davis, an affluent old Jewish lady who told it like it was (and was extremely funny), reminded us that when a ship faces a hurricane or a tornado, it is not the time to ditch the captain, and right now we are facing BOTH a hurricane and a tornado. A little unusual, but still very effective.

I wish I had managed to make it inside in time to speak about the re-election of the board. I have a number of points that I wanted to convey, points that I will post about a little bit later this evening.

Unfortunately, the votes were not totaled by the time I left. Mr. Lewis asked for the results, but was informed that they were still being tallied up. There were rumors floating about Sloan being ousted, and Lewis stripped of his Chairman titled. As of the latest reports, it appears the board may be safe, but they are recounting the votes for Lewis. Too close to call. It doesn’t surprise me, given the LARGE number of people there, and the mixture of attendees.

Once I hear word, I’ll keep you posted.

Update: Please check out these videos for some takes on the meeting

Protestors call for Lewis to be fired - notice the first lady they speak with, this was the one mentioned earlier, and was truely a pain to listen too. Upset, but rarely had any facts together

BofA delays release of votes on Lewis

Quick apology: this article would have been posted much sooner, but due to technical difficulties beyond my control (batteries died in wireless keyboard), I was unable to finish until now.

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.