Ken Lewis retirement: reaction and reflection

Wall Street

On Thursday of last week, Bank of America (BoA) was rocked by the news that CEO Ken Lewis would be taking early retirement and vacating his post by the end of the year.

While the firm, one of Wall Street's largest financial services organizations, saw shares in mid-morning training on Thursday move even lower, a note from Egan-Jones - a credit rating firm - predicted that Lewis’ retirement will help the bank "restore credibility" after its controversial deal to acquire Merrill Lynch at the height of the financial crisis last year.

While that deal, one of many acquisitions during Lewis' time at BoA, resulted in the bank being left with billions of dollars in additional losses - forcing it to take a second government bailout - reports now show that Lewis can expect a hefty payout of $68.8 million when he leaves at the end of the year.

According to reports, that figure, accumulated in his 40 years of work at Bank of America and predecessor companies, is bolstered by a a lump-sum pension benefit that was valued at $53.2 million in the bank's last public report on his holdings. In addition, Lewis, 62, has $10.6 million in deferred compensation coming his way and will keep 305,000 shares of restricted stock that will vest over the next few years, which, at today's stock price of $16.34, is worth about $5 million.

Meanwhile, since the announcement on Thursday, analysts have been commentating on Lewis' early, but not so-shocking, departure. Reports in the New York Times highlight Richard Bove, a bank analyst at Rochdale Securities, who praised Lewis as a brilliant leader and argued that he was unfairly driven out by attacks from Congress and the Securities and Exchange Commission (SEC).

The New York Times also cited reports the office of Andrew Cuomo, the New York State Attorney general who has been investigating Lewis’s deal for Merrill and the bonuses that were paid to Merrill employees around that time.

According to a statement from his office: “Ken Lewis’ decision to step down will have no impact on our continuing investigation.”

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