Kenneth D. Lewis was ousted as Bank of America Corp.'s chairman Wednesday, but retained his seat on the company's board and his titles as president and chief executive.

B of A announced late in the day that a shareholder vote had “narrowly” approved splitting the roles of chairman and CEO, leading to a shake-up that put Walter E. Massey, a president emeritus at Morehouse College in Atlanta, at the head of the table for future board meetings.

Activists had vowed a strong showing outside the Blumenthal Performing Arts Center in downtown Charlotte for the $2.3 trillion-asset company's annual meeting Wednesday, but the expected circus never materialized after representatives of many groups apparently mistimed the arrival of shareholders.

Though there were very few explosive confrontations once the meeting began, the assembly included plenty of tense moments, and in the end, investors spoke loudly with their votes against Lewis. Shareholders did, however, re-elect all 18 directors, who in turn said in a press release that they “unanimously” support Lewis remaining president and CEO.

Such a chain of events had concerned observers, who had warned it could create new challenges for the company, management, and the new chairman.

Jeffrey Sonnenfeld, a professor in management at Yale University, said “removing a chairman is a step but is surely not a panacea.” Sonnenfeld, in an interview given before the meeting, said that, since B of A’s board supported every decision that turned investors against Lewis, “plucking one of those folks to be the chairman isn’t that assuring.”

Marilyn Seymann, the president and CEO of management consulting firm M One Inc., was concerned about efforts to remove Lewis without a strategic alternative in mind. “That can be more dangerous than keeping things the same,” she said last week. “A lot of people want changes because they are angry and want blood, but change just for the sake of change is the wrong reason.”

There was ample angst at the annual meeting, just not at the decibel-raising levels some had expected. A handful of representatives from environmentalist groups, angry taxpayers and union groups picketed outside the venue, but in limited numbers. Shareholders who spoke inside were split between those upset with Lewis, mainly for his purchase and lack of disclosure on Merrill Lynch & Co., and those who still supported the executive.

The meeting had its most-awkward moment at the finale when Lewis told attendees that a recount would delay the release of results. “This is first time this has ever happened,” he attested, leading many investors to accuse the company of sandbagging by choosing to issue a press release rather than publicize preliminary figures earlier. B of A later confirmed that it was the shareholder votes, including the one that led to Lewis’ ouster as chairman, that bogged down the process.

There was no delay in the day’s other closely watched shareholder meeting, as Morgan Stanley investors shot down a proposal to split the chairman and CEO roles, with John Mack avoiding the same fate as Lewis. The New York investment bank also announced that shareholders re-elected all of its directors.

In Charlotte, one of the tersest exchanges had nothing to do with Merrill. A livid shareholder, wearing a t-shirt demanding that someone “fire Kenneth Lewis,” mixed words with Lewis over his 2007 and 2008 compensation. After she demanded that he find a way to donate his $1.5 million salary to local charities, Lewis touted his charitable record. “With my pledges, I actually give away more than I make,” he responded.

Another uncomfortable conversation occurred between a representative for CtW Investment Group, which is composed of several pension funds looking to oust Lewis, and Thomas Ryan, who chairs the company’s corporate governance committee. They sparred briefly over B of A’s decision to include so-called uninstructed broker votes in the final tally, which drew consternation from the CtW representative.

Ryan defended the company’s decision to count broker-cast votes as one that for now is required by the Securities and Exchange Commission. (The SEC, however, is considering barring the practice next year.) “We have to count all valid votes,” he told the dissatisfied and persistent pension group representative. “I don’t think we can do something illegal to satisfy one shareholder group.”

Even with those votes counted, dissident investors can now claim a victory in their efforts to get rid of Lewis, who hits his 40th anniversary with the company this year. There were several investors who demanded an explanation for buying Merrill, withholding information on accelerated bonuses, and massive losses, and details on the government’s pending stress test results. All told, B of A is now on the hook for $45 billion in capital, along with billions more in asset guarantees from the government.

The board’s decision to elect Massey, 71, a long-time director who joined after the board after the company’s 1998 purchase of BankAmerica Corp. in San Francisco, to replace Lewis, is unlikely to sit well with some investors. Massey joined the former BankAmerica’s board in 1993 and has served on several other corporate boards, including his current seat on the board of McDonald’s Corp.

Jon Finger, another upset shareholder who had been pushing for an outsider as chairman, expressed hope last week that institutional investors would also pressure the board to bring in new directors “who would be interested in changing the culture of the company.” While intent on seeing Lewis gone, Finger said “presumably the company could exist with him as CEO … but there must be critical oversight” from the board.

In addition to the board, Lewis is still finding favor with the man who reared him to be chairman and CEO.

Hugh McColl Jr., Lewis’ predecessor, said in an interview prior to the meeting that he still supported his protégé. “He is the best man to be in charge,” McColl said, expressing a belief that outsiders had been over-exaggerating the company’s issues. “They are piling it on,” he said. “This is a business with more than 100 million customers. Its real strength is $50 billion in pretax preprovision earnings. With that, they can build capital on the front end.”

Lewis, in what turned out to be his last opportunity to chair, seemed willing for the most part to let shareholders vent during the nearly four-hour meeting, and many investors used multiple trips to the microphone to spew. Through it all, Lewis gave a stoic defense of his leadership, constantly contending that the purchases of Countrywide Financial Corp. and Merrill Lynch would pay off.

“These acquisitions are not mistakes to be regretted,” Lewis said during his prepared remarks. Pointing to B of A’s $4.2 billion first-quarter profit, he added that, “Both are looking more and more like successes to be celebrated.”

Joe Price, B of A’s chief financial officer, told attendees that the company has been internally modeling annual profit of $30 billion for Bank of America, using select years for the bank, Countrywide, and Merrill as a gauge. A slide revealed that the company avoided both feast and famine years for each entity. “That gives you a perspective on the sheer power of the company,” Price argued.

Lewis defended a decision to withhold information from shareholders about the company’s discussions with the government about Merrill Lynch, saying that “as a legal matter, there was no duty” to disclose talks. He briefly clarified testimony he gave to New York Attorney General Andrew Cuomo, claiming that regulators threatened to remove him and his board if they backed away from Merrill.

Some observers had interpreted the deposition as saying that Lewis and the B of A board opted to move forward with the Merrill acquisition because of the threats, a point that Lewis disputed from the Blumenthal stage.

“We made a decision independent of the threat of the government,” Lewis said, adding that the board was more considerate of the risks of a financial meltdown and its possible ramifications for B of A. The decision, he added, “was not about a selfish desire to keep our jobs. Every member of this board, including me, would be alright if we had to leave the company.”

Now Lewis’ job may be in jeopardy due to the shareholder vote. While the board gave implicit support to Lewis manning the helm, there are plenty of examples of ousted chairmen who were soon asked to resign completely from the companies they led. Last year, those casualties included G. Kennedy Thompson at Wachovia Corp. and Kerry Killinger at Washington Mutual Inc.

Lewis has said in the past that he would prefer to remain at Bank of America for another two to three years to oversee the integration of his most-recent acquisitions.

Donald Mullineaux, a finance professor at the University of Kentucky, said Lewis will be fighting history to remain at the helm. “The last two times someone was removed as the chairman, within a short time they were gone as CEO,” he said in an interview last week. “If I were him, I would read it as bad news.”

Sonnenfeld said having a new chairman could allow the board to enter negotiations with Lewis for an expedited retirement. “Part of the problem is that Lewis has become the focal point for a hanging party,” he said.

“Sure, he made some bad calls at the end of a stellar career,” Sonnenfeld added. “They should be privately working on an accelerated succession plan to let him leave with some dignity. Removing him as chairman helps with the planning process.”

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