Tags: Bank of America, Bank of America Merrill Lynch, Ken Lewis, Merrill Lynch, Wachtell Lipton
There are two competing theories of how companies should be governed; one says that management should have a lot of leeway to do what it thinks is best and shareholders should keep quiet and, if they’re unhappy, maybe sell their shares; the other says that shareholders own the company and anything that stands in the way of their replacing inept or corrupt management is bad. The pro-shareholder side has I guess been having a good run lately, what with Chesapeake bowing to Carl Icahn’s demands to be less evil, and with the performance of the Facebook IPO giving evil governance a bad name, but the let’s-say-anti-shareholder position is pretty well entrenched. And the leading exponents, or at least my favorite exponents,* of that view are the law firm of Wachtell Lipton, which invented the poison pill so that managers wouldn’t have to lose their jobs just because someone else wanted to buy their company and their shareholders wanted to sell it.
So let’s say you’re a CEO, and you want to buy a company, and you negotiate to buy that company for stock so your shareholders have to approve the merger. And let’s say juuuuuust hypothetically that, after you agree on the deal and mail the proxies and set up the vote and are about to complete your grand plan, you find out that the company you’re buying is sort of a piece of shit, and that you didn’t know that when you agreed to buy it. Embarrassing for you. What do you do?
Well presumably you ask your lawyers and when those lawyers happen to be Wachtell Lipton they tell you their favorite thing to tell you, which is, “you have lots of options but FOR GOD’S SAKE LEAVE THE SHAREHOLDERS OUT OF IT.” And if you were Ken Lewis in late November / early December 2008, that’s what you did. You can read here his [new lawyers'] defense of his decision not to tell Bank of America shareholders that Merrill had some massive upcoming losses before they voted to approve the acquisition of Merrill; it basically goes like this: Read more »
Tags: ask for forgiveness not permission, Bank of America, Bank of America Merrill Lynch, Ken Lewis, Merrill Lynch
Remember in 2008, when Ken Lewis was all, “Oooh, wait, I don’t know about this Merrill Lynch thing, it looks kinda bad, I don’t think I want to buy it anymore, I’m nervous [bites nails, shifts weight from one foot to the other like he has to pee]” and tried to back out of the deal? And Hank Paulson threatened to stuff him in a meat locker if he did so Lewis said okay, fine, I’ll buy it and then did, without mentioning anything to shareholders about Merrill’s impending losses? Well 1) People are still upset about it but 2) Ken was under the impression shareholders were on a need to know basis. Read more »
Tags: Bank of America, Bank of America Merrill Lynch, bonus watch, bonuses, that's gonna leave a mark
Today is bonus communication day in BofA global markets and while there are no specifics to be had just yet, a couple things to note: 1) it’s not looking good and 2) this hurts them more than it hurts you. Read more »
Tags: Bank of America, Bank of America Merrill Lynch, Brian Moynihan, CEO's who could snap at any moment, I'll come down there and give you a crew cut, let's see your clippers, stop yelling at me!, unravelings
On December 17, 2009, Ken Lewis introduced to the company the guy who would be taking over his job, Brian Moynihan, by telling the audience that one of his successor’s “unique characteristics” was that he “actually wanted the job,” a reference to the fact that no one else, literally, did. While Moynihan was undoubtedly aware that the new gig would not carry the same prestige or money as running Goldman, or the groupies that come with running JPMorgan, or the pony rides that come with running Citi, one thing that apparently came as a surprise to him– but that those who turned down the position could foresee– was that this job? Really, really sucks.
In the beginning, if indeed Bri-O reached that conclusion as well, he kept it to himself, maintaining a stiff upper lip. But as the fruits of Countrywide founder Angelo Mozilo’s labor really began to blossom and Moynihan? Started to lose it. Read more »
Tags: Bank of America, Bank of America Merrill Lynch, Brevan Howard, equities, Fabrizio Gallo, Hedge Funds, Larry Summers
According to CNBC’s Kate Kelly, BH made the decision to close the $600 million fund after portfolio manager Fabrizio Gallo left to join Bank of America (which has got to hurt) and investors were rumored to be unhappy with the ‘personnel changes.’ In related news, Larry Summers has apparently been tapped to help ‘woo‘ new clients, so they should be okay.