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As most people know by now, Ken Lewis was removed from his chairman position at
Bank of America
last week, although he still retains the CEO position. Since that time, I've had various media contacting me to ask, was this the right thing to do with a leader such as Lewis.
That, of course, is a tough question to answer and, surprisingly, there are very strong opinions on both sides. One perspective seems to argue that Lewis has been the saving grace of BofA, a strong leader who was pressured by the federal government to make the ill-advised
deal and to stay quite about it. The other perspective is that Lewis sold out in order to keep his job and turned his back on his responsibility to shareholders by not disclosing the condition of Merrill at the time of the deal.
As I've stated in this column before (just last week in fact),
that can't be ignored. As both Chairman of the board and CEO, it is a difficult argument to support that he in some way was powerless in this drama. The fact of course is that only history will either vindicate or vilify him because there is a lot we do not know. But it is also likely this latest move by shareholders is also not entirely what it appears to be. You only have to look at the case of Kevin Killinger of
(now part of
) or Ken Thompson of
(now part of
) to see that it is not uncommon for a two-step process that eventually leads to the CEO ouster. (
CEO Vikram Pandit should be paying attention to his stress test as well!)
On the other hand, there are some things to remember about this action as it relates to corporate governance and leadership that are not exactly the same as Wachovia:1.
Nearly half the shares of Bank of America are owned by 15 institutional investors. These investors also have fiduciary responsibilities and have to consider the consequence of their actions on their own constituents. A wholesale lack of confidence in Ken Lewis, removing him from both Chairman and CEO roles at the same time, could dramatically impact the performance of BofA based on item #2.2.
The board of Bank of America is completely unprepared with a succession plan for Ken Lewis in either role. Placing Walter Massey in the Chairman role is probably the least disruptive move that BofA could have made. For one thing, Massey has been with Lewis for a very long time. They are cut of the same cloth. And while Morehouse College president emeritus Massey has a great deal of corporate board experience (
to name a few), he has little experience in the finance sector. This means that Lewis is still an important player without a successor in a troubled bank at a troubled time.3.
There is much to be done in making Bank of America whole again, including the payback of federal monies that have been received. It would be expensive to remove Ken Lewis from the CEO position at this point of time because, like it or not, he has been the architect of the current scenario. As much as I am not a fan of the "we can't fire them" mentality, I see the point of the shareholders when it comes to keeping him in the chief executive position.4.
It's all political. Many shareholders are stuck between their frustration with the actions of Lewis and their frustrations at the actions of the current Obama administration. If you buy the story that Paulsen held a gun to Lewis's head about Merrill Lynch, then you might buy the whole victim picture that Lewis has been painting about the episode and as a result truly believe he is a victim of circumstances.
By the way, none of these reasons above is satisfactory in my opinion. He was the CEO, he had a responsibility to the shareholders and he has not denied that he shirked the responsibility. His argument is that he had no choice. But remember that Hank Paulson and Ben Bernanke did not literally hold a gun to his head.
Even if his story is true, Lewis always had the option to let them try to oust him for protecting the shareholders. He made his choice and in so doing, chose the consequences. That's not a reason to excuse him -- that's life. For Bank of America to succeed long term, it is likely that a new CEO (and chairman) will need to be found soon.
In the meantime, the integrity of Ken Lewis is in question and needs to be closely monitored. That will not be a strength of his long-time friend Massey, so the shareholders will have to continue to be diligent. And investors will need to continue to be wary.
Leadership Development Specialist, L. Todd Thomas ("Dr. Todd") PhD, M.S, M.A, is Founder of
. Dr. Todd holds a PhD in Human Communication, Masters in Educational Psychology and a Masters in Interpersonal Communication. He was a professor at North Carolina State University and Indiana University before leaving for the corporate world. He led Organizational Learning at Rockwell Avionics and was the executive responsible for Organizational and Executive Development at Daimler Financial Services for 10 years. Dr. Todd has coached and consulted with over 3000 leaders from 40 different countries spanning 4 continents. He is a speaker, seminar leader and the author of "Leading in a Flat World: How Good Leaders Become Greatly Valued." Other titles include "Life Lessons for Leaders" and "Stop Wasting Your Time: Creating High-IMPACT Meetings" as well as the "Leadership Integrity Quotient(tm)" leadership assessment.