There were few fond eulogies for beleaguered Bank of America CEO Ken Lewis when he announced his intention to resign at the end of the year. Now it seems he'll be supplanted even sooner than expected, with Bank of America planning to appoint an interim CEO this week. The days following this announcement have turned from Lewis to considerations of what his departure say about the nation's largest bank. Many financial analysts are perturbed by the $125 million golden parachute Lewis will receive, and are voicing doubts that the nation's largest bank prepared is adequately prepared for the loss of its chief. Others ask whether the "culture of mediocrity" Lewis left in place at the bank can be cured.
- Failure to Prepare a Successor Will Haunt Bank of America, says Douglas A. McIntyre at 24/7 Wall St. "The bank's board is likely to be heavily criticized for not having set up a secession plan much earlier because it has become increasingly clear that Lewis's chances of keeping his job have been diminishing. The government put several new directors on the B of A board recently, many of them former bankers. The fact that they are poorly prepared to replace Lewis is a sign of an amazing lapse in judgment. Lewis will probably be gone by mid-month instead of on December 31, his planed departure date. The bank may not get the CEO it deserves because the selection will be too hasty. B of A, which has struggled for over a year of desperate attempts to keep its losses and legal problems from swamping it, will have as its CEO someone who was picked in a few short days. It is hard to see how that helps the company recover."
- Blame Lewis for Failing to Groom a Successor, writes Joe Nocera at the New York Times. "I couldn't help noticing that when Mr. Lewis made his surprise announcement this week, he said he would stay on until the end of the year -- in part because there was no chosen successor. The board now has to find a new chief executive, at a very stressful time, because Mr. Lewis never groomed one himself...Isn't that what a real leader does?"
- Feckless Board of Directors Should Stop Huge Payout, says Jonathan Berr at Daily Finance. "Lewis has already been paid handsomely thanks to a board of directors that appears to have been derelict in its duties. Clearly, they did not act in the shareholders or the bank's best interests. Maybe [government pay czar Kenneth] Feinberg could argue that the contract is outrageous on its face. To a layman, that certainly seems to be the case."
- Blame the Culture of Mediocrity at Bank of America, says Chris Walen at the Big Picture. He blames the banks current troubles partially on "the culture of mediocrity that Lewis promoted at BAC [Bank of America], a culture where competent managers were systematically forced out by the human resources department of BAC. For all of his insider savvy and HR muscle within the bank, Lewis really was not an operator. BAC, after all, is a combination of dozens of companies merged over the last 30 years that were never actually integrated...This goal of short-term cost cutting pervades BAC and has led to an organization that produces narrowly focused employees and business units, with no incentive to innovate or manage risk...."