Ken Lewis was preparing for the fight of his life this weekend in a high-stakes battle to retain his job as chief executive of Bank of America when shareholders assemble for the annual meeting of the financial giant.
But at the same time, his opponents are planning a string of announcements and protests designed to pressure him out, in retaliation for what they say was his reckless decision last year to take over Merrill Lynch and his failure to disclose the worsening condition of its new acquisition in the weeks before the deal closed.
The $50bn (£34bn) takeover, agreed by Mr Lewis in a matter of hours over the extraordinary September weekend when Lehman Brothers collapsed, has soured to such an extent that the US government was forced to inject $20bn into the company and to guarantee $118m in losses on Merrill's toxic portfolio of credit derivatives.
Corporate governance campaigners are expecting a close vote and unions which have been leading one of the campaigns against his re-election will be staging protests this Tuesday outside hundreds of branches in major cities including New York, Chicago and Los Angeles. Campaigners say that more than 10,000 people have already signed "taxpayer proxies" calling on the bank to fire Mr Lewis and to accede to other demands, including better healthcare benefits for its workers and lower credit card interest rates.
"Over the course of a weekend, Mr Lewis transformed a company that was well-positioned to weather the financial crisis into one of its most costly casualties," said Michael Garland, head of Change to Win, a union-sponsored group. "And as it was becoming clear that Merrill was in a worse condition than he believed, he failed to take steps to get out of the deal or to disclose the fact to shareholders."
Dissident shareholders believe that Mr Lewis's position has been weakened by the disclosure last week of his testimony to Andrew Cuomo, New York's Attorney General, who is investigating the Merrill acquisition. Mr Lewis testified that Hank Paulson, then Treasury Secretary, had threatened to have him sacked if he did not proceed with the deal, and that disclosing the widening losses last December was something that "we do not want". In the end, the bank only disclosed Merrill's record-breaking fourth quarter loss beside its annual results in mid-January, at the same time as it announced the Treasury's cash injection. The takeover deal closed on 1 January.
Bank of America says that it acted appropriately throughout the acquisition process. But shareholders are suing, claiming they would have tried to stop the deal if they had known about Merrill's parlous state. One of the groups vying to be lead plaintiff is CalPers, the influential public employees pension fund. It is due to announce its voting intentions tomorrow, ahead of Wednesday's shareholder meeting. Mr Lewis also faces a poll on whether the roles of chairman and chief executive should be split.Reuse content