Ken Lewis Ouster: The Start of Something Big

Wednesday marked the beginning of what could be a stockholders revolution as Bank of America CEO Kenneth D. Lewis was ousted as chairman of the board.

A coalition of unions, community groups, pension funds, and angry stockholders forced Lewis to step down over his acquisition of Merrill Lynch at $15 billion loss [1] and decision to give out $3.6 billion in bonuses [2] to Merrill Lynch's executives. His loss of the chairmanship is most likely a precursor to him being forced to leave as CEO [3]as it was for Wachovia's Kennedy Thompson and Washington Mutual's Kerry Killinger.

A coalition called Take Back the Economy [4], composed of organized labor, religious groups, community organizations and Moveon.org, had been calling for Lewis' ouster for several months. Brave New Films produced a video narrated by former Labor secretary Robert Reich outlining the corruption [5] occurring at Bank of America . Through a grassroots and netroots-driven campaign, over 100 events were held across the nation against Bank of America and more than 90,000 taxpayer proxy cards [6] were collected calling for Lewis's ouster for his corruption and greed.

In addition to the ouster [7], these groups demanded that two new board seats be created for an independent taxpayer director and a front-line employee. They demanded that all bonuses for executives be eliminated until taxpayers are paid back money the bank received under the Troubled Asset Relief Program. They also demanded that stronger whistleblower protections for any workers who reports abusive lending or banking practices are put in place. Finally, they called for Bank of America to provide health-care to all of its 247,000 workers, which it currently does not.

Meanwhile, The Finger Brothers, owners of 1.1 million shares of Bank of America from the sale of their family-controlled bank, Charter BancShares, to Bank of America), spent over $100,000 of their own money running television ads [8] against Lewis. At the same time, worker-controlled pension funds like the CalPERS (the California pension plan whose efforts to sucessfully bring down corrupt NYSE Chairman DIck Grasso I wrote about last month here [9]) and other state workers' pension funds came out publicly that they were going to vote against Lewis [10]. All the heat from activists, angry investors, and state pension funds lead proxy advisory firms like RiskMetrics and Glass Lewis, which advise the portfolio managers of large institutional investors such as churches and nonprofits, to advocate that their clients cast their votes against Lewis [11].

As a result of the organized campaign from activists, pension funds, and angry stockholders, Lewis was ousted as chairman by a narrow 50.34 percent to 49.66 percent margin.

The message to the CEOs was clear: Watch out! Either CEOs will be more responsive to the demands for reform from small stockholders and activists or they will risk sharing the same fate as Ken Lewis. With over $6 trillion of workers' money in retirement plans, pension funds, profit-sharing, and stock plans, worker-controlled pension funds and their allies have a lot of weight in making these CEOs more accountable [9].

Could we be onto the start of something big, perhaps a stockholder revolution? I certainly hope so. My message to all the people upset over their losing their retirement funds is, "Don't mourn, organize."