Bank of America Corp's lead director Temple Sloan resigned from the largest US bank's board of directors on Friday. Sloan's departure is a blow to Chief Executive Kenneth Lewis, whom shareholders ousted as chairman of the bank's board at the annual meeting last month.
Sloan was a member of the board of directors that originally made Lewis CEO. With the government having given Bank of America more than $45 billion of capital, the US is seen has having great influence on the bank's management. US officials have urged the bank to revamp its board and bring in directors with more banking experience, the Wall Street Journal reported earlier this month.
Citigroup, the only other bank to receive $45 billion from the government, faced similar US pressure to add banking experts to its board. If Bank of America's troubles mount, many analysts and portfolio managers reckon that Lewis will be pressured to resign.
Investors had criticised Sloan, who had been on the bank's board of directors for 13 years, for not doing more to prevent Lewis from buying Merrill Lynch & Co Inc. The bank said in a statement Sloan's resignation is effective from May 26.
In a filing it said Sloan's departure was not the result of any disagreement with the company. Three major advisory groups counselled investors against re-electing Sloan, a chairman and former chief executive of auto parts company General Parts International, as a director at the bank's annual meeting in April. Investors re-elected Sloan to the board, but by the narrowest margin of any of the bank's directors, with 37.4 percent of votes cast against him.
Shareholders at the meeting criticised the bank's 18 directors for failing to disclose huge losses that Merrill was amassing at the end of last year, even as it was paying out $3.62 billion in bonuses to employees Sloan, 70, was chairman of the executive committee and the compensation and benefits committee. He also served as a member of the bank's corporate governance committee.
Shareholders narrowly ousted Lewis as chairman by voting 50.34 percent in favour of electing an independent board chairman compared with 49.66 percent against. Walter Massey, a long-time board director who replaced Lewis, has been examining the board's committees and considering potential successors to Lewis, the Wall Street Journal reported earlier this month.