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The California Public Employees’ Retirement System (CalPERS) today announced it is voting against the re-election of all 18 Bank of America directors, including Chief Executive Officer and Chairman Ken Lewis.
CalPERS contends that Lewis and other directors failed to disclose information to shareowners in connection with Bank of America’s merger with Merrill Lynch. The pension fund also believes that the undisclosed payment of billions of dollars in bonuses to Merrill Lynch executives – before completion of the merger - warrants a vote against all directors.
“The entire board failed in its duties to shareowners and should be removed,” said CalPERS Board President Rob Feckner. He noted the poor condition of the company, the failure by directors to disclose the extent of Merrill Lynch’s losses prior to consummation of the merger, the payment of billions of dollars to Merrill executives in bonuses for failure, and the failure of the board to act in the best interests of shareowners in overseeing management.
According to news reports, Bank of America directors allowed more than $3.6 billion in bonuses to be paid to Merrill Lynch executives and that the payment date was stepped up several months - prior to completion of the merger transaction. They also failed to fully disclose the true financial condition of Merrill Lynch until after the merger was completed last fall.
At the company’s April 29 annual meeting, CalPERS will withhold votes for Lewis; Temple Sloan Jr., lead director, Compensation Committee chairman; Thomas Ryan, Nominating & Governance Committee chairman; and directors Jackie Ward, Robert Tillman, Monica Lozano, Walter Massey, Thomas May, Patricia Mitchell, William Barnet, III, Frank Bramble, Sr., John Collins, Gary Countryman, Tommy Franks, and Charles Gifford. CalPERS also opposes Merrill Lynch directors who were added in January 2009: Virgis W. Colbert, Joseph Prueher, and Charles Rossotti.
If the board is removed, CalPERS believes that a special election should be called to place a new slate of directors on the board in an orderly and effective manner. As a long-term shareowner, CalPERS is willing to assist the company in this process.
CalPERS owns 22.7 million Bank of America shares.
CalPERS has approximately $176 billion in assets and is the largest U.S. public pension fund. It administers retirement benefits for more than 1.6 million active and retired State, public school, and local public agency employees and their families on behalf of 2,600 California public employers. For additional CalPERS proxy votes and corporate governance information, visit www.calpers-governance.org.
