For months, critics hollered for Ken Lewis’ scalp, and even some supporters wondered how long he could keep his job as CEO of Charlotte-based Bank of America Corp. At the end of September, Lewis, 62, ended the suspense by announcing that he would retire by the close of the year. Detractors cheered. The stock price veered — first south, then slowly north.
With his departure, BofA will be rid of a leader who has become a lightning rod for controversy — multiple investigations have been launched into its acquisition of New York-based Merrill Lynch & Co. — but one who usually came through with solid, sometimes spectacular, profits in his eight-year tenure. Though it stumbled with a $1.8 billion net loss in the fourth quarter of 2008, BofA came back to net $7.5 billion in the first half of 2009. His retirement announcement came before third-quarter earnings were released.
Many of BofA’s directors, who will pick and oversee his replacement, are new to their roles, thanks to a shake-up earlier this year, and many of Lewis’ top lieutenants are relative newcomers, too. A CEO from outside the company wouldn’t have the taint of belonging to the team that did the Merrill deal but would need time to learn BofA — the nation’s largest bank holding company by assets and one cobbled together through acquisitions over several decades.
Lewis, never known as a people person, nonetheless was able to get the employees inherited from those acquired companies to work together for BofA’s good, and the company won’t be better off without him, says Tony Plath, associate professor of finance at UNC Charlotte. “He’s strong when it comes to operations and business integration and putting the right people in charge of the right businesses. Those are exactly the skills the company needs right now.”
But some shareholders, led by Jon Finger of Houston-based Finger Interests Ltd., say Lewis’ departure will help the company shed its bad habits and recover. Finger says Lewis’ leadership position has been compromised. “This company and shareholders deserve to have a CEO who’s not distracted by five or six ongoing investigations.”
BofA’s first-half profit was aided by one-time gains, and it will have a hard time keeping up that pace, he predicted. “They’re continuing to wrestle with credit issues that are driven in part by the recession and driven in part by poor underwriting and poor risk management. They’re going to work through their problems for the next two quarters.” Days after those comments, BofA posted a third-quarter net loss of $1 billion.