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Bank of America Corp.'s board may extend its search for a new, permanent CEO into 2010 if directors can't settle on a candidate in the next four days, according to people familiar with the matter.
The directors, who met Friday, may be willing to go past their Nov. 26 target and the Dec. 31 retirement of CEO Ken Lewis if it means getting a better choice, according to a person familiar with the deliberations. At least four external candidates, including Citigroup Inc. director Michael O'Neill, rebuffed approaches.
Options include an interim chief or a delay in Lewis' retirement.
Bank of America faces pressure to pick someone in a short period who is acceptable to regulators and whose pay would be low enough to win approval from the Treasury Department paymaster, the people said. Politics also has influenced the choice at the biggest U.S. bank, the people said. House Oversight Committee Chairman Edolphus Towns said last week that Brian Moynihan, one of two internal candidates, may lack the needed leadership.
That's narrowing the field and giving the board "an incredibly tough job," said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. "For people who have choices, it's hard to figure out why someone would take this job."
The people familiar with the matter spoke before any board meetings on the weekend. They declined to be identified because CEO selection is confidential at the Charlotte- based bank, the biggest in the U.S.
Bank of America representatives have said the bank was aiming for a decision by the Thanksgiving holiday, calling it a target rather than a deadline. Holland said director Chad Gifford, a former CEO of FleetBoston Financial Corp., which was bought by Bank of America in 2004, could step in on an interim basis.
Some candidates are reluctant to wade into disagreement between board members and the government over the bank's future strategy, said Rochdale Securities LLC analyst Richard Bove, citing large shareholders briefed on the matter.
"The government and perhaps some of the new directors want the bank cut back in size, while the old core Bank of America people don't want to do that," Bove said.
O'Neill, a former chief financial officer of predecessor BankAmerica Corp., withdrew from consideration after talking with search-committee members because he felt they didn't fully grasp how serious regulators are in their demands for change, the people said.
O'Neill told the committee members that the company needed to increase the size of its banking operations and shrink its trading business, one person briefed on the talks said. The committee members responded that such a shift would be unproductive because it would abandon the strategy set when Lewis bought Merrill Lynch & Co., the person said.
Compensation is another obstacle, because Bank of America's $45 billion in government aid puts the CEO under the purview of paymaster Kenneth Feinberg. Lewis agreed in October to forgo any pay for 2009 after being advised to do so by Feinberg.
Feinberg probably wouldn't approve a package big enough to lure PNC Financial Services Group Inc. Senior Vice Chairman William Demchak, who was among 18 candidates on a list provided Nov. 3 by Finger Interests Ltd., a Houston-based investment fund with 1.1 million Bank of America shares. As of August, Demchak owned about 219,000 PNC shares, currently worth about $12 million, data compiled by Bloomberg show.
At least four of those on the Finger list subsequently said they weren't interested. They are O'Neill; former JPMorgan Chase & Co. investment-banking co-head William Winters; U.S. Bancorp CEO Richard Davis; and Eugene McQuade, a former Freddie Mac president who now oversees Citigroup's largest banking subsidiary, according to people familiar with the matter.
Lewis has indicated to associates that he would remain as CEO on an interim basis if asked by the board, according to a person familiar with his thinking.
