CHARLOTTE — Ken Lewis was ousted as chairman of Bank of America Corp. on Wednesday after shareholders angry about the company's acquisition of Merrill Lynch & Co. voted to separate the job from that of chief executive.
Lewis will remain the chief executive officer of the bank, but board member Walter Massey, president emeritus of Morehouse College in Atlanta, will become chairman.
Shareholders narrowly voted at the bank's annual meeting Wednesday to split the jobs following months of rancor over the Merrill Lynch acquisition.
After the deal was sealed Jan. 1, Merrill Lynch reported $15 billion in fourth-quarter losses, and it was learned that Bank of America had approved the early payout of billions of dollars in bonuses to Merrill Lynch employees.
Lewis, who was chairman and CEO since 2001, has spent much of this year defending his actions, and did so again during the angry, four-hour meeting.
The bank said the shareholder proposal to separate the chairman and CEO jobs had passed 50.34 percent to 49.66 percent; it was the only shareholder proposal to be approved. Shareholders re-elected all 18 of Bank of America's directors, including Lewis.
Big investors, including California's employee pension fund, had called for shareholders to oust Lewis and his fellow directors at the meeting, which was attended by more than 2,000 people.
One of those investors, Michael Garland, director of Value Strategies for CtW Investment Group, praised the ouster of Lewis. His group handles 33 million Bank of America shares and works with union-affiliated pension funds.
"It's huge," he said. "It's an enormous victory for shareholders."
"We'll have an independent board chairman, and now the CEO will be accountable to a board chaired by an independent director. It's a critical first step," Garland said.
At the meeting, Garland criticized Lewis, saying bad management decisions led to a dramatic drop in Bank of America stock.
Jason O'Donnell, a bank analyst with Boenning & Scattergood, said the vote outcome was not surprising.
"It's been building up for a while," he said. "There's been a lot of investor discontent regarding his decision, particularly, to buy Merrill Lynch."
Shareholders lined up early in the gathering to speak, with many hurling criticism at Lewis and the Bank of America board for the government-brokered purchase of Merrill Lynch.
"I find it incredible you didn't have the guts to stand up to the U.S. government," said Judith Koenick, of Chevy Chase, Md., who said she lost thousands of dollars when BofA shares plunged after the Merrill Lynch purchase.
The government pressured Bank of America into buying Merrill Lynch during the same weekend in September that another investment bank, Lehman Brothers Holdings Inc., collapsed, setting off one of the most intense periods of the financial crisis.
Shareholder Gerald Abrams, of Boca Raton, Fla., also had an exchange with Lewis about the deal, asking, "what happened to due diligence" in Bank of America's investigation of Merrill Lynch's finances.
Lewis responded that Bank of America didn't anticipate the worsening credit conditions in the country, which elicited from Abrams, "why do the deal?"
Lewis replied that it wasn't in the best interest of shareholders for Bank of America to pull out of the agreement.
In his remarks, Lewis defended the bank's acquisition of Merrill Lynch and another troubled company, mortgage lender Countrywide Financial.
Lewis said the companies are providing "the positive counterbalance to our traditional banking businesses, which at this point of the business cycle are under much more stress from rising credit losses."
"Countrywide and Merrill Lynch are two of the most important reasons Bank of America is the most profitable financial services company in the United States so far this year," Lewis said.
"Today, I can state without reservation that these acquisitions are not mistakes to be regretted. Both are looking more and more like successes to be celebrated."
The Charlotte-based bank and Lewis have been under intense scrutiny because Bank of America is one of the biggest recipients of government bailout money and because the losses at Merrill Lynch turned out to be much higher than anyone expected.
Many shareholders also are irate over the drop in the company's stock price. Bank of America has fallen 42 percent since the beginning of the year, closing at $8.68, up 53 cents, before the shareholder vote was announced. Shares fell as low as $2.53 in late February.