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Is Bank of America actually vetting outside candidates for chief executive, or is it just trying to create the appearance of doing so?
That's the accusation raised Tuesday in a regulatory filing by a Houston investment firm. The firm, Finger Interests Ltd., also reiterated its opposition to Brian Moynihan and Greg Curl, two current executives at the bank who have been seen as front-runners for the CEO job.
"We think it's important that this be a transparent process and that the board look at all reasonable candidates," said Jon Finger, a partner at the firm. "To date, it appears it has not been a true search."
The firm said outgoing CEO Ken Lewis, who is also a board member, should recuse himself from the process.
"This is not a monarchy, where the current CEO gets to choose his successor," the firm said in Tuesday's filing. "Shareholders deserve an honest process for a successor CEO."
A board committee has been searching for a new CEO ever since Lewis, under fire for his purchase of Merrill Lynch & Co., announced Sept. 30 that he will retire at year's end. The committee will offer its pick to the full board for approval.
Finger said institutional investors are pushing for an outside candidate, which would represent a clean break from the Lewis era. However, an insider wouldn't need as much time to get up to speed on the bank's operations and would probably be more careful to preserve the practices that have been successful.
Institutional investors usually don't publicly comment on individual companies where they hold shares. Chris Cernich of PROXY Governance, which advises institutional shareholders how to vote, said an inside candidate would be "a very difficult sell to a lot of shareholders."
Finger made a similar filing last month, asking shareholders to express their wishes for an outside candidate. "Change the Status Quo," they wrote at the time. In Tuesday's filing, Finger rolled out an 18-name list of potential outside candidates, topped by Al de Molina and Jim Hance. Both are former chief financial officers at Bank of America.
Finger also raised doubts about the qualifications of Moynihan and Curl, asking: "Are either men considered to be industry leaders or innovators in any area of commercial or investment banking or risk management?"
The CEO search is being led by a six-member board committee, with half of the members being former directors of FleetBoston Financial Corp. That suggests that the committee could favor Moynihan, who also came from Fleet when it was bought by Bank of America in 2004.
Lewis is not on the committee. But he intends to remain on the board until Dec. 31, and in last month's earnings call he said he had "voiced opinions" to the board as it decides on the new CEO.
Without giving details, Finger Interests said it has confirmed that the board has "not even contacted or made serious inquiries much less offers to the most qualified and obvious candidates," such as de Molina or Hance.
"We believe the search for a successor CEO is cosmetic, at best," the filing said.
A bank spokesman declined to comment on the filing.
The board has been tight-lipped on the CEO search, and hasn't given specifics about who it's looking at or when the successor will be named. The board members have a delicate balance to strike: They don't want to rush the decision and pick the wrong person, but they also don't want to keep the bank - and its shareholders, regulators and customers - in limbo.
It could be difficult to entice a qualified outside candidate, since Bank of America has yet to pay back its $45 billion in federal loans and is operating under intense government scrutiny of its day-to-day operations and executive pay practices.
It has been suggested that the board could have an easier time naming an interim CEO to run the bank for two years or so. That could just prolong the uncertainty - but the idea does have merit, said Michael Robinson, formerly the public affairs and policy chief at the Securities and Exchange Commission.
"It's like a politician who isn't worried about getting re-elected: They might actually do something," said Robinson, who is now a senior vice president at Levick Strategic Communications.
Finger Interests' 18-name list of potential CEO candidates is "in no particular order" and "by no means complete," the filing said:
Al de Molina, CEO of GMAC Financial Services and former CFO of Bank of America.
Jim Hance, former CFO of Bank of America. He was also a rival of Lewis for the CEO job.
William Demchak, senior vice chairman at PNC Financial Services Group in Pittsburgh.
Richard Davis, CEO of U.S. Bancorp in Minneapolis.
Ned Kelly, former CFO of Citigroup Inc. in New York. Was moved to vice chairman in July.
Charlie Scharf, CEO of retail financial services at JPMorgan Chase & Co. in New York.
Arkadi Kuhlmann, president and chairman of the online bank ING Direct USA.
John Mack, CEO of Morgan Stanley in New York and a native of Mooresville. He will retire at the end of the year. Tuesday, a source close to Mack said he wouldn't be interested in the BofA job.
Bill Winters, co-CEO of investment banking at JPMorgan Chase, which he soon plans to leave. He is based in London.
Gene McQuade, named CEO of Citigroup's banking division in July. He worked briefly for BofA after two separate mergers.
John Kanas, CEO of the private equity group that bought Florida's failed BankUnited in May.
Alfred Kelly, president of American Express Co. He plans to leave the company early next year, wanting a chance to be a CEO.
Michael O'Neill, brought onto Citigroup's board this year. He was CFO of San Francisco-based BankAmerica Corp.
Richard Fairbank, CEO of Capital One Financial Corp. in McLean, Va.
Jerry Grundhofer, brought onto Citigroup's board this year. Former CEO of U.S. Bancorp.
Tony Terracciano, chairman of Sallie Mae. Former CEO of First Fidelity, which was bought by Charlotte's First Union in 1995.
Gerald Ford, chairman and formerly CEO of First Acceptance Corp., a Nashville auto insurance company.
David Nelms, CEO of Discover Financial Services outside of Chicago.
