Bank of America board faces CEO dilemma

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If there’s one bank CEO who’s on the hot seat, it’s Bank of America’s Brian Moynihan, who won the job in January 2010 after an unusually grueling and public search. Since then, it’s been a very tough slog, one reflected in the steadily dwindling stock price to near penny-stock status.

Over his tenure, the stock fell from about $15 to around $6 now. Last year, there was plenty of talk about how long the board would stick with him. That talk has continued into the New Year. One well-known banking and finance professor in Bank of America’s back yard predicts that he is not long for the job.

“Brian’s days are numbered,” said Prof. Tony Plath, who was quoted by the Orlando Business Journal. “The board bears a lot of responsibility for what’s gone wrong.”

There’s a lot you could quibble with when evaluating Moynihan's performance. But there’s reason for optimism as well. The stock has been on fire this year, and the bank is on the verge of inking a far-reaching deal to settle mortgage fraud claims with many states. One could argue that the bank has markedly improved its capital position, though the Fed will have much to say about that via the stress test.

All in all, Moynihan was given a Herculean task and was handed the remains of one disastrous deal (Countrywide) and one that hasn’t been an income statement nightmare but has generated lots of controversy, not to mention litigation (Merrill Lynch). The problems were vexing, and perhaps insurmountable.

The board is no doubt aware of the issue. One thing they’ll have to consider is whether or not a successor would really do anything differently than what Moynihan is doing now. If the answer is no, what’s the point in replacing him, unless the simple act of change will do wonders for the stock?

For more:
- here’s the article
- here’s an FT article

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