According to a contract Ken Lewis has with B of A, he is entitled to a $53+ million pension plan after he steps down as CEO of B of A later this year. That equates to an annual pension benefit of $3.5M for the rest of his life.
The question has been posed as to whether Lewis is entitled to his pension in view of the fact that B of A accepted $45 billion in TARP funds, and still owes the taxpayers most of that $45 billion. In addition, it is purported that he committed fraud surrounding the bonuses paid to Merrill Lynch employees after B of A’s acquisition of Merrill, that caused B of A shares to plummet in value, costing Bank of America share holders to lose fortunes in their investments.
Ken Lewis has received more than $60 million in bonuses and stock options over the last 8 years. Should he be required to pay those bonuses back to the share holders?
Who was Ken Lewis responsible to as CEO of a major corporation? Was he more responsible to B of A shareholders? Or the U.S. government?
Here are some facts:
Ken Lewis joined B of A in 1969 as a credit analyst for North Carolina National Bank (NCNB, predecessor to NationsBank and Bank of America) in 1969 as a credit analyst in Charlotte. After serving in a variety of leadership roles across the company, he was named chief executive officer and president of Bank of America in April of 2001.
During his tenure as CEO, B of A grew to be one of the largest and most influential banks in the world.
Ken Lewis is currently under investigation for fraud connected with the acquisition of Merrill Lynch on July 1, 2008. The purchase of Merrill Lynch was a deal that was worked out between Ken Lewis and the Treasury department during the financial meltdown that took place beginning in November 2007.
The fraud allegations surrounding this purchase, involve questions about whether or not Lewis withheld information from shareholders about Merrill losses and year-end bonuses to be paid to Merrill Lynch employees despite the losses. The issue of Lewis’s “dishonesty” has not gone away in the last year. In fact, it continues to grow. The SEC is preparing a case that will be tried in federal court in the coming months. NY attorney general Andrew Cuomo is considering filing civil charges as early as next week; and multiple other parties are investigating Lewis.
“This matter is not closed — the investigation has to continue,” said Representative Dennis J. Kucinich, Democrat of Ohio. “He became the face of a system that was suddenly exposed as not being as adept and forthcoming as people would expect.”
The end result is that the reputation of Bank of America has been tainted, so Lewis has announced that he will be stepping down as CEO before the end of this year. However, Bank of America will continue to pay Lewis’ legal bills after he retires.
It is estimated that the litigation surrounding all the questions about the purchase of Merrill could drag on for years. But, as soon as he steps down as CEO, Lewis will be entitled to $3.5M per year.
In view of what has occurred, and the resulting losses to B of A shareholders, is Ken Lewis entitled to his $53 Million pension?
Legally, according to attorneys, this is a pension that was a part of normal retirement policies with B of A, and falls under ARISA rules, so he is entitled to the pension. But morally, should this man accept the pension? If he accepts the pension, should he be required to return the $60M in bonuses he has already received?
However this all ends, it is certain the Ken Lewis’ legacy as CEO of Bank of America will be eternally tied to the Merrill Lynch acquisition and the fortunes B of A shareholders lost as a result of that decision.
Written by Shelby Bateson
Exclusive to HULIQ
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