A report today in the New York Post suggests that shareholders are anxious to oust Kenneth Lewis, CEO of Bank of America Corporation (NYSE: BAC). The paper says that a group of angry investors, spearheaded by Jerry Finger, has compiled a list of demands to present at the bank's next annual meeting. Finger and his irate mob will request that the roles of CEO and chairman be split, and the outspoken investor said it's safe to assume that a brand-new chief executive is also high on his wish list.
Finger made headlines last month by filing a class-action lawsuit against B of A, alleging that its merger with Merrill Lynch failed to protect shareholders' interests. New York Attorney General Andrew Cuomo is now investigating that very same matter, and reports say that the AG may demand the return of $4 billion in bonuses to Merrill employees that were rushed through prior to the merger's completion.
If BAC shareholders are up in arms, they certainly have good reason. Shares of the Dow component have plummeted 85.4% during the past 52 weeks, and the ill-fated acquisition of Merrill Lynch certainly hasn't helped matters. The stock recently found a floor near the $5 level, but this support could kindly be viewed as "last-ditch."
Meanwhile, option players may be trying to call a bottom to BAC's lengthy decline. The equity has racked up a 10-day call/put ratio of 2.45 on the International Securities Exchange (ISE), as bullish bets have been more than twice as popular as their bearish counterparts. This ratio is lingering just 7 percentage points from an annual optimistic peak.
In today's trading, B of A shares have shed more than 4%. If upbeat option players are spooked into closing out their long positions on the stock, it could exacerbate the bank's losses.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
Why do we have a weak dollar?
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
Reader Comments (Page 1 of 1)
2-02-2009 @ 2:24PM
BHarrison said...
If the stock holders don't throw Lewis out as CEO . . . and make major changes in the Board of Directrs, then they are no better than the American people who continue to re-elect CORRUPT Congressmen. If the stockholders don't demand INTEGRITY of the corporate financial reports then they deserve whatever befalls them . . . it is past time to get rid of INEPT INCOMPETENT and/or CORRUPT CEOs and Boards of Directors.
2-10-2009 @ 10:16AM
sonomaeast said...
Sham on you Mr. Lewis! Having lost a fortune in capital and a lot of dividend income (relative to a middle class investor) your time should be cut short. Have you no dignity? Sham on you. Jerry H.
3-13-2009 @ 10:07AM
boston41 said...
After the mutual fund scandal in 2003 BofA updated it's ethics policies and even created an employee hotline through an outside ombudsman claiming a new zero tolerence policy on ethics violations. I was shocked when I attended events after this involving the trust department and private bank where executives forced subordinate employees to play a game called "pick a number". The employee who lost was forced to charge the entire event to their corporate credit card keeping the expense and it's approval in the room. I believe that the executives also instructed the employee to file an expense report that did not itemize the liquour expense, often in the tens of thousands of dollars. When I reported this to the employee ethics hotline I was referred back to the executive office to whom I was accusing! So much for confidentiality and independent review. I would assume since my executive manager is still employed that nothing was ever done.