RENEE MONTAGNE, host:
NPRs business news starts with the top banker under fire.
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MONTAGNE: Ken Lewis, chairman and CEO of the countrys biggest bank is the man of the hour today, though not in the way he might have hoped. His company, Bank of America, holds its annual shareholder meeting with the banks stock price in the tank and investors furious about the banks acquisition of Merrill Lynch. Some of the biggest shareholders are demanding change at the top. From member station WFAE in Charlotte, North Carolina Simone Orendain reports.
SIMONE ORENDAIN: One of the most aggressive groups against the BofA chairman and CEO Ken Lewis and several other directors, is the Houston-based investment banking team of Jerry and Jonathan Finger. They hold 1.1 million shares of Bank of America and are running television ads against the bank.
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Unidentified Man: Bank of Americas shareholders - since buying Merrill Lynch BAC stock is down 75 percent, thousands of jobs cut and billions in shareholder loses. Isnt it time for change?
ORENDAIN: Jonathan Finger says he never imagined hed lead a shareholder revolt.
Mr. JONATHAN FINGER (BofA Shareholder): We really felt like management and the board violated the trust of shareholders, especially when Ken Lewis - in mid January at their earnings call - said that they had gone ahead and completed the Merrill Lynch transaction, quote for the good of the country. We think it was more important that he focus on the good of the shareholders, which was his ethical and his legal obligation.
ORENDAIN: Bank of Americas stock was trading near three dollars a share last month, but it has recovered a bit recently. The Federal government gave the bank $45 billion to support the Merrill buyout. Now, protesting taxpayer groups are adding to the drama. Theyre mad and want Lewis fired. Even the banks well timed $4.2 billion earnings report last week, didnt satisfy shareholders. In fact BofAs stock dropped that day angering big retirement investors like Michael Garland of CtW.
Mr. MICHAEL GARLAND (Director of Value Strategies, CtW): Regardless of the numbers it doesnt bear on the upcoming director election or the failure of the board - both with regard to the Merrill acquisition and bonus payment.
ORENDAIN: Just yesterday, the influential California public employees retirement system said it would vote against all Bank of America board members, including Chairman Ken Lewis. Last week, Connecticut state treasurer expressed her concerns. It comes after state employee pension funds in Texas, Ohio, and California filed suit over the Merrill Lynch acquisition. Bank of Americas spokesman, Scott Silvestri, called some shareholder campaigns misleading, but declined to say which. Cumberland Advisors financial analyst David Kotok says investor anger at Lewis and the board is unfounded.
Mr. DAVID KOTOK (Financial Analyst, Cumberland Advisors): The issue about Bank of America and personal resolutions which are aimed at specific individuals, because people are either angry or unhappy with the stock performance or something else, is a witch hunt.
ORENDAIN: Kotok says shareholders have themselves to blame because they could have sold their stock before the Merrill Lynch deal closed. Its generally hard for shareholders to vote off a board member. But University of North Carolina Finance Professor, Anil Shivdasani, says they can still have a strong impact.
Professor ANIL SHIVDASANI (Finance, North Carolina University): Even if 25 or 30 percent of the shareholders withheld their vote, that would seen as a pretty negative signal and sign of extreme dissatisfaction on the part of investors. Certainly would make it more challenging for the board to say that Ken Lewis is the right person to lead the company.
ORENDAIN: This year Bank of America hired two advocates to make the case for Lewis and the directors. Its the clearest indication the bank fears losing its leaders.
For NPR News Im Simone Orendain in Charlotte. Transcript provided by NPR, Copyright NPR.