Meet the new boss, same as the old boss?

Elected Wednesday to replace the embattled Kenneth D. Lewis as the chairman of Bank of America Corp.'s board, Walter Massey brings to the table credibility on Wall Street. On that, he is distinguished from Lewis, whose problems with institutional investors cost him a chunk of his power and prestige.

But what Massey, who is 71, does not have is a mandate for major change — or, given B of A's mandatory retirement age of 72, the time to enact it even if he wanted to. In fact, observers say his very election suggests strategy adjustments of any import are the last thing B of A's board is interested in.

"Unless we see some catastrophic development happening, I don't see the situation changing anytime soon," said Frank Barkocy, the director of research at Mendon Capital Advisors. "The shareholders had a chance … and now the only way to get more meaningful change would be for the government to force changes on the board and its makeup."

By and large, observers believe that Massey's appointment is that of placeholder, a signal that the board is willing to give Lewis, still B of A's chief executive and president, more time to right the ship and show consistent profitability before enacting any wholesale alterations to the company's business model. Donald Mullineaux, a financial professor at the University of Kentucky, said the board would be wise to consider options to sell some of B of A's $2.3 trillion of assets, whether the purpose is to raise capital or to create a more manageable organization over the long term. "The company has gotten too big," he said. "They may need to shrink it because the tentacles are far too wide."

By appointing Massey as chairman, the Charlotte company's directors also made clear they are trying to avoid further confrontation with stakeholders. Massey was one of just six directors on the 18-member board to garner more than 90% of shareholder votes cast in his re-election bid. His history with corporate boards, including McDonald's, Motorola and British Petroleum, likely boosted his stature, observers said.

Massey, who was elected to the BankAmerica Corp. board in 1993 and joined the current board after the San Francisco company's landmark 1998 sale to NationsBank Corp., deflected questions about his qualifications. "Give me a little time to settle in," he wrote in response to an e-mail message seeking an interview, while conceding surprise at his fate.

While Massey's standing may be intact, many of the directors suffered huge setbacks in the wake of B of A's hurried Merrill Lynch & Co. Inc. acquisition and the lack of timely disclosures over accelerated bonuses and mounting 2008 losses at the New York investment bank.

In addition to Lewis, dissident investors and some proxy advisory firms have focused much of their ire on O. Temple Sloan, who as lead director would have been the obvious next chairman. Sloan, however, received only 62.6% support, faring worse than the 67.3% of "yes" votes cast for Lewis to the board. Several investor groups also opposed the re-election bids for Thomas Ryan, chairman of the corporate governance committee; Jackie M. Ward, who chairs the asset-quality committee; and three directors who had joined earlier in the year from Merrill Lynch.

RiskMetrics LLC went an extra step, recommending that B of A over time find a way to overhaul the entire board.

Jeffrey Sonnenfeld, a Yale University management professor, said the biggest issues with the board are its sheer size, and that some directors have been added because of their prominence rather than financial acumen. "The company's board is too large," Sonnenfeld said in an interview. "They should pluck off some of the ceremonial hood ornaments."

D. Anthony Plath, a finance professor at the University of North Carolina at Charlotte, said B of A has grown "faster than the quality of its board." Plath suggested that directors actively recruit a "heavy hitter" to become the next chairman, saying the company should be ambitious with its wish list. Unfortunately, he said, many high-profile bankers would likely have cultural issues with B of A, including former BankAmerica CEO David Coulter or former Citigroup Inc. CEO John S. Reed. "Even when you look outside the current board, it is a thin bench to pull from."

Plath suggested former Bush Cabinet members Colin Powell and Condoleezza Rice as candidates who could stand up well against Washington pressure, which has been relentless this year. Theoretically, they wouldn't even have to have the chairman's role; several directors could retire next year, opening up positions, observers said. Besides Massey, four other directors will be in their 70s next year, including Sloan and Ward.

Massey, meanwhile, may provide a short-term buffer between Lewis and institutional investors. But the honeymoon period is almost definitely going to be short; the new chairman is already receiving pressure from a group of pension funds that have waged war against Lewis and the company's management team for years.

On Thursday, William Patterson, the executive director for CtW Investment Group, encouraged directors to accelerate Lewis' retirement from the company, saying that Massey was tasked with overcoming "recalcitrance" concerning succession planning. "The wisdom of the board's choice for its new leader rests on whether the board moves swiftly … or continues as business as usual," Patterson said.

Observers are also expressing concern Massey may not prove a particularly successful advocate for B of A's cause in Washington, where the company, which has had a fractious relationship with its overseers, awaits the public release of its stress test results.

On the upside, some say, Massey's election does at least buy the board time to explore its options, while making it a more difficult target for criticism.

"He is a short-timer who has 12 months to repair relationships," particularly with large investors, Plath said. "This gives them a year to improve credibility, make changes to the board and improve the corporate governance culture."

Indeed, observers say that with Lewis no longer at the helm of the board, directors are likely to have more conversations involving contingency planning in case B of A's profitable first quarter proves to be an anomaly. A Bank of America spokesman had no comment.

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