We’ve argued for the last few months that, whether or not Ken Lewis survives the vote to oust him as Chairman of Bank of America (BAC), he should resign. He bet the company, and he lost. It doesn’t matter whether he is or was the “right person for the job.”
This morning on TechTicker, Tuck professor Syd Finkelstein made the same case. Aaron Task:
Ken Lewis is expected to be reelected to Bank of America’s board but a proposal to split the CEO and Chairman roles is too close to call, according to preliminary results from the bank’s shareholder meeting today. Shortly after 1 p.m. EDT, the company said the final results have been delayed because of the volume of votes being tallied.
But regardless of the outcome and the compliant board’s continued public support for the CEO, Lewis should resign, says Sydney Finkelstein a Professor of Management at Dartmouth’s Tuck School of Business.
To Finkelstein, Lewis has “had enough chances” and made some egregious errors, including:
- Ill-timed acquisitions of Countrywide Financial and Merrill Lynch.
- The ham-handed firing of John Thain.
- Basing first-quarter results on write-ups of Merrill Lynch assets.
- Repeated declarations of Bank of America’s health, followed by revelations to the contrary; results of the stress tests being the latest.
Most importantly, Finkelstein says Lewis failed “the most challenging litmus test” by failing to do his fiduciary duty and disclose the Merrill Lynch losses to BofA shareholders ahead of vote on the merger. Lewis could have either resigned in protest or pushed back after Hank Paulson threaten to fire him if BofA pulled out of the Merrill deal, he says.
“I don’t know why Ken Lewis just continues to just come up with these stories – ‘my hands were tied. I couldn’t do this, I couldn’t do that,'” Finkelstein says. “You have fiduciary duty to protect your shareholders. There are going to be more lawsuits.”
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