Word: banking
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...demands for the head of Citigroup (C) CEO Vikram Pandit have not ended and may rise to a crescendo again if the bank receives poor "stress test" ratings from the federal government. The drumbeat of dissatisfaction about Ken Lewis, head of Bank of America (BAC), has gone on for months. Recently, proxy advisory RiskMetrics/ISS Governance Services recommended that the financial firm's shareholders vote Lewis...
...Firing bank CEOs poses significant risk and is unlikely to help shareholders or the government. (See pictures of the Top 10 scared traders...
...Pandit, who is considered a well-meaning dolt by most people. Stan O'Neal of Merrill Lynch was replaced by former NYSE CEO John Thain. Thain made the error on more than one occasion of saying the worst was behind Merrill only to end up selling the company to Bank of America (BAC). Thain became enmeshed in the controversy over whether he properly disclosed Merrill's fourth quarter financial condition and if he was involved in paying Merrill executives bonuses that should not have been paid without Bank of America's consent. AIG (AIG) may be the example that best...
...most significant risk in replacing the current bank CEOs is that the new people coming in may or may not be better selections than the people whom they replace. In many quarters this is considered a sort of governance recidivism. But, that does not mean that the argument is entirely flawed. Pandit, Thain and Willumstad did not do any better than their predecessors. As a matter of fact, they probably did much worse. They were given the specific tasks of ferreting out problems in the companies which they were picked to operate and fix them. Each one expressed optimism about...
...most convincing argument for keeping Lewis in his job is that he is now recognized as the Emperor without any clothes. Whatever hubris he had about the success of his tenure running Bank of America has been removed. He may be the most focused large company chief executive in the country facing crushing pressure from his board, shareholders and the federal government. His actions are confined by all of these groups monitoring his decisions 24 hours a day. If his board can keep him from media appearances where he always talks about how much he regrets taking TARP money...