Ken Lewis (executive)
Kenneth D. Lewis | |
|---|---|
| Born | April 9, 1947 Walnut Grove, Mississippi, U.S. |
| Occupation | Banking executive |
| Years active | 1969–2009 |
| Known for | CEO, president, and chairman of Bank of America; overseeing acquisitions of Countrywide Financial and Merrill Lynch |
Kenneth D. Lewis (born April 9, 1947) served as the CEO, president, and chairman of Bank of America, which ranks as the second-largest bank in the United States and twelfth worldwide by asset size. Throughout his leadership, Lewis managed the purchases of troubled firms Countrywide Financial and Merrill Lynch, transactions that led to substantial financial setbacks and necessitated federal aid for the bank. On September 30, 2009, Bank of America announced that Lewis would step down by the end of the year, with Brian Moynihan appointed as CEO and Walter Massey taking over as chairman.
Early life and career
Lewis spent his early childhood in Walnut Grove, Mississippi before relocating at age five to Heidelberg, Germany, where his father was stationed with the Army. He obtained a Bachelor of Arts degree in finance from the J. Mack Robinson College of Business at Georgia State University.
Beginning his professional journey in 1969 at North Carolina National Bank (NCNB) as a credit analyst, Lewis advanced to oversee both domestic and international divisions as NCNB transitioned into NationsBank, which eventually became Bank of America.
Chief Executive Officer
Following Hugh McColl’s retirement in 2001, Lewis assumed the roles of CEO, president, and chairman at Bank of America. In November 2008, amidst an $86 billion loan from the Federal Reserve, he reassured investors that the institution remained "one of the strongest and most stable banks in the world."
Recognition
Lewis earned the title Banker of the Year twice, in 2001 and 2008, and was recognized as Top Chief Executive Officer by US Banker in 2001. Additionally, Time Magazine included him among the 100 Most Influential People in 2007.
Salary
In 2007, Lewis’s total earnings reached $20.4 million, comprising a $1.5 million base salary, a $4.25 million cash bonus, $11.1 million in stock awards, and $3.38 million in options. His compensation for 2008 amounted to $9 million, including a $1.5 million base salary, $4.26 million in stock grants, and $2.97 million in options. To avoid conflicts with Kenneth Feinberg—the U.S. Treasury’s special master for compensation—in 2009 Lewis accepted only $32,171 in total pay, foregoing salary, bonuses, and stock options. Since becoming CEO in 2001, he accumulated $148.8 million from cash payments and stock sales and departed Bank of America with retirement benefits exceeding $135 million covering pension and life insurance.
Acquisition of Countrywide
On January 11, 2008, Lewis announced Bank of America’s purchase of Countrywide Financial for $4 billion, describing it as a "rare opportunity." The final acquisition price was $2.5 billion; however, this deal has been criticized as "the worst deal in the history of American finance," with overall costs potentially surpassing $40 billion due to real estate losses, legal fees, and regulatory penalties. The financial damage was so extensive that Bank of America contemplated placing Countrywide into bankruptcy protection by 2011.
Engineered takeover of Merrill Lynch
Amidst the 2008 financial crisis, Lewis orchestrated a $50 billion acquisition of Merrill Lynch. FDIC Chair Sheila Bair condemned the purchase as excessively costly and referred to Merrill Lynch and Countrywide as "two of the sickest financial institutions in the country." She pointed out that Bank of America had been financially sound prior to these acquisitions but became burdened afterward. In January 2009, Bank of America disclosed significant fourth-quarter losses linked to Merrill Lynch that necessitated a $20 billion federal bailout. Merrill Lynch reported an operating loss totaling $21.5 billion during that period.
On September 28, 2012, Bank of America consented to pay $2.4 billion to resolve an investor lawsuit related to its acquisition of Merrill Lynch.
On April 29, 2009, due to shareholder unrest regarding the Merrill Lynch takeover, Bank of America investors narrowly approved separating the chairman and CEO positions. This decision removed Lewis from the chairman role while he retained his titles as president and CEO. Approximately one-third of shareholders voted in favor of his complete removal from the board.
Retirement
Lewis declared his intention to retire effective December 31, 2009, highlighting advancements in merging Merrill Lynch and Countrywide as well as the establishment of a stronger leadership team. Market analysts linked his resignation to difficulties stemming from the Countrywide purchase, operational losses, and his limited background in investment banking.
His pension package amounted to $53 million, which sparked criticism as an example of excessive executive pay. Since his pension was fully vested, he qualified for the entire benefit. In response, Bank of America subsequently suspended supplemental executive retirement plans to better align compensation with shareholder interests.
Legacy
During Lewis's leadership, Bank of America suffered substantial losses related to the acquisitions of Countrywide and Merrill Lynch. After his departure, the bank sold assets exceeding $60 billion to improve its capital position, resolved an $11.7 billion dispute with Fannie Mae over Countrywide loans, agreed to a $2.4 billion settlement addressing investor lawsuits tied to Merrill Lynch, and participated in an $8.5 billion industry-wide agreement concerning improper foreclosure practices. Since 2007, nearly $50 billion has been spent on refunds and legal costs connected to Countrywide.
In 2011, Lewis’s successor Brian Moynihan announced intentions to divest portions of the business to repair balance sheet damage caused by the Countrywide acquisition. Moynihan criticized acquisitions made during Lewis’s era for generating excessive overhead and expressed plans to reverse many such transactions.
Following his retirement, Lewis has been involved in legal actions including a lawsuit initiated by New York Attorney General Andrew Cuomo alleging fraud related to the Merrill Lynch acquisition. In 2014, Lewis received a three-year ban from serving as an officer of any public company and was ordered to pay $10 million for failing to disclose $9 billion in Merrill Lynch losses before the acquisition.
Warren Buffett offered an uncommon favorable perspective on Lewis’s impact, describing him as an "ironic hero" of the 2008 financial crisis for preventing Merrill Lynch’s failure and thereby mitigating the recession’s severity. Buffett emphasized that Merrill Lynch’s collapse would have exacerbated the fallout from Lehman Brothers’ bankruptcy.
Other roles
Lewis holds memberships in both the Financial Services Roundtable and Financial Services Forum, represents the Fifth District on the Federal Advisory Committee, and has held leadership roles including former chairmanship of United Way of Central Carolinas, Inc. He serves on the committee promoting corporate philanthropy, acts as director for the Homeownership Education and Counseling Institute, is vice chairman of the Corporate Fund Board at The John F. Kennedy Center for the Performing Arts, and previously chaired the National Urban League.
External links
- Official biography available at bankofamerica.com
- Profile featured in USA Today, September 2008
- Pages with script errors
- Articles with short description
- Articles with hCards
- No local image but image on Wikidata
- 1947 births
- Living people
- People from Walnut Grove, Mississippi
- Bank of America executives
- American bankers
- American chief executives of financial services companies
- Georgia State University alumni