Management Turnover as Change Agent

Tuesday, March 31, 2009

CEO Watch - Ken Lewis, Bank of America, Update #4

The ratchet continues to turn a notch on Bank of America CEO, Ken Lewis. According to an analysis by Elinor Comley of Reuters,

The government may now add to the pressure from shareholders, analysts said. The sudden departure of Wagoner after nine years in the top job at GM signals the Obama administration is looking for management changes at bailed-out companies.

“His longevity in the job is probably very much in question,” said Keith Wirtz, chief investment officer of Fifth Third Asset Management and a former CIO at a Bank of America subsidiary. Fifth Third holds shares in the bank.

The bank disagreed with the assessment. “We do not see the parallel with the U.S. auto industry,” said a Bank of America spokesman, noting that since 1991 the bank has been profitable in every quarter except one, and made a $4 billion profit in 2008.

Still, shareholders say Lewis is in a precarious situation, citing both the government bailout as well as the fourth-quarter losses at Merrill, which suggest Bank of America did not perform adequate due diligence.

Lewis’ time as CEO of Bank of America may finally be coming to an end. As the pressure continues to grow, Lewis and the board will find it more and more difficult to justify his position as CEO. Keep a close eye on B of A.

For more:

The Plum Line

The Washington Post

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