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CHARLOTTE — The California Public Employees' Retirement System, the largest U.S. public pension fund, said Tuesday it will vote against re-electing all 18 Bank of America Corp.'s board members, including Chairman and Chief Executive Ken Lewis.
CalPERS, an influential fund, says Lewis and the board failed to disclose information on Bank of America's acquisition of New York-based investment bank Merrill Lynch & Co. The group also opposes the more than $3.6 billion in bonuses that were paid ahead of schedule to Merrill employees before the deal was completed, even as Charlotte-based Bank of America was begging the government for aid to complete the acquisition.
The government helped orchestrate the acquisition of Merrill Lynch by Bank of America over the same weekend in September that another investment bank, Lehman Brothers, went under, setting off one of the most intense periods of the financial crisis.
Bank of America completed its purchase of Merrill Lynch on Jan. 1.
"The entire board failed in its duties to shareowners and should be removed," said Rob Feckner, CalPERS board president, in a statement.
A Bank of America spokesman was not immediately available for comment.
CalPERS owns 22.7 million Bank of America shares, or about one-third of one percent the bank's shares outstanding. The group joins a growing list of institutional and individual shareholders opposing the re-election of Lewis.
Bank of America is scheduled to hold its annual meeting on Wednesday in Charlotte, and management has been under pressure lately as more holders express their displeasure with the bank's current leaders.
Bank of America has received $45 billion from the government's $700 billion Troubled Asset Relief Program. As part of that money, the bank received $20 billion in January after Lewis requested it to help offset mounting losses at Merrill Lynch.
The bank also faces other challenges. Tuesday, reports surfaced that Bank of America, along with Citigroup Inc., will need to raise more capital based on early results of the government's "stress tests" of lenders.
Federal Reserve officials told reporters last week that all 19 banks that underwent stress tests will be required to keep an extra buffer of capital reserves beyond what is required now in case losses continue to mount. That would mean some banks will likely have to raise additional cash. But the Fed stressed in a statement that a bank's need for more capital reserves to meet the requirements should not be considered a measure of the "current solvency or viability of the firm."
Shares of Bank of America fell 77 cents, or 8.6 percent, to close at $8.15.
