BANK OF AMERICA WAKE UP

Today, all shareholders of Bank of America should be more than totally indignant – they should be absolutely and unequivocally furious. The stock dropped more than 18% on the announcement that BofA needed more bail-out funds to support the Merrill acquisition. This after earlier assurances that no such step would be necessary.

The evidence seems to suggest that BofA executives have known all along that these added bail-out funds would be needed and, in particular, knew about it before the shareholders voted on the merger. But, BofA executives apparently decided to keep it a secret from the shareholders. Never mind that Treasury Secretary Paulson also knew the situation and didn’t disclose it to Congress or the public. It is the Bof A executive suite and Board of Directors who are fully accountable to the shareholders.

Now, in view of current circumstances, there are stories circulating that BofA may have to cut its already greatly reduced dividend further because they are precluded from using TARP funds to pay dividends.

If the shareholders had known all of this before the merger vote, it is very doubtful that they would have approved the merger. But, this merger was apparently necessary to serve the monstrous ego of Ken Lewis and his merry band of corporate executives.

The people that the shareholders hired to steer the ship (the CEO, the Executive Suite, the Board of Directors, the Corporate attorneys, and the accountants) permittred this gross failure to disclose and should be held accountable.

The Merrill acquisition has turned out to be a disaster for the shareholders. But, it is not like some shareholders didn’t see it coming. BofA summarily dismissed their concerns and apparently just went full speed ahead just “because the train was on the tracks” and that decision has led to a full scale train wreck.

If you asked most shareholders what was more important – the security of their dividends or rescuing Merrill, the answer should have been plain to management Instead, management chose to jepordize the dividend.

There aren’t any immediate actions available to small individual shareholders relative to this deplorable situation except hope that some well heeled shareholder steps forward and files a class action suit against the officers and directors, attorneys and accountants for allowing this chain of events to take place. In the meantime, shareholders can immediately commence an e-mail and letter writing campaign calling for the resignations of CEO Ken Lewis and his senior executives as well as calling for the immediate resignations of the Board of Directors and their replacement by more responsible people who would put the shareholders first.

January 24, 2009: Follow-up: See the site :”dandodiary.com: for a post on the class action law-suit filed against B of A and its officers and directors.

The stockholders of B of A have lost $100 billion in value and that information did not get one-tenth of the press coverage that the Madoff ponzi scheme costing investors $50 biillion got. What is wrong with that picture?

Unconscionable Executive Rewards – continued

The Wall Street Journal of Monday January 12, 2009 contained an article relative to the frustration of investors over big executive payouts. The article discussed resolutions being submitted by shareholder groups to limit executive compensation.

The article contained a prophetic statement “All of the shareholder resolutions are non-binding and it would be unsusal if any won majority support among shareholders on their first try.”

Shareholders should examine why passage of resolutins would be “unusual”. First, compensation packages are prepared for the Board of Directors by the Compensation Committee of the Board. Next, the Board solicits proxy votes and usually recommends against all shareholder submitted proposals. Finally, the Board usually holds enough proxies to determine the outcome of any vote.

The method of selecting Directors, even though individually voted into office by shareholders, is very suspect. There is usually a Nomination Committee composed of supposedly “independent” Directors that recommends the names of candidates for Board seats that appear on the Proxy statement. But, it remains to be seen that the selection is made without any “suggestion” or pressure from “inside” directors and/or officers. The only thing certain is that names placed in nomination did not come from the shareholdeers.

Directors in large corporations are paid well and are extended many perks by management. The level of emoluments extended to directors are more than adequate to massage and mold votes in favor of what the CEO’s want. Thus, the very notion of Director independence is questionable.

If Directors were truly “independent”, many shareholder proposals would be submitted for a vote with a favorable recommendation from the Board but that is just not the case.

Shafreholders must take a more dramatic stand to make shareholder proposals limiting executive compensation binding on the corporation and to assure their passage. This action could include greater activity to unseat directors who are members of the Compensation Committee for faling to reign in management as well as efforts to bring about the exposure or dismissal of executives who fail to perform but continue to draw down big compensation packages.

February 4, 2009 – A reader basically asks what shareholders can do? For starters, when the proxy materials are received vote against all candidates for the board. Next, send e-mails to every one you know that may be a shareholder and urge them to do the same. Next, send e-mails to the shareholder relations department of the company and let the company know how they feel. If enough people do this, the over bloated executives may get the idea.

Unconscionable Executive Rewards

Too many CEO’s and top level executives in public companies treat the company and shareholder money as their personal “cookie jar”. These people seem to have lost sight of the fact that they are employed by and work for the shareholders. Yet, the shareholders do not appear to have any effective voice in determining the level of their compensation, bonus and benefits packages.

Corporate reporting of total compensation and benefits is not always comprehensive and straight forward. It takes a lot of research to find out exactly what total compensation was received when that total compensation includes salary, bonuses, stock options, health insurance, life insurance, gernerous retirement benefits, excessive termination benefits,country club dues, home security, corporate travel on private jets, limosene services, generous expense accounts, the personal use of corporate event tickets, personal travel on corporate jets, cell phones, blackberries and PDA’s plus other “frills”.

It should be mandatory that corporate reporting include an unambiguous, straight forward listing, in one place, of total compensation for all senior level employees, by line item, that includes the cost of all benefits received.

It is an absolutely ridiculous notion that any corporate executive is worth a salary in excess of $3,000,000 per year let alone generous bonuses and other benefits on top of that. The argument that these levels of compensation are needed to attract the best and the brightest have been demonstrated to have been very foolish arguments born in boom times when almost any manager could have made money. An attempt should be made to identify any top executives who steered their companies in a way that avoided the painful collapse of the year 2008. They would be few and far between. Those executives would have earned their multi-million dollar compensation packages. But, the executives who watched a collapse of stock value during their watch should be absolutely ashamed of their poor performance and should refund the bonuses paid in 2006, 2007 and 2008, since their managem,ent in those years led the companies to the 2008 decline. Taking comfort in the fact that most corporate executives are in the same boat is not a acceptable excuse. As to the compensation level needed to attract top talent, it is suggested that a well publicized executive search at much more modest levels of compensation would identify many more qualified applicants than are eventually submitted to the Boards of Directors for consideration.

The bottom line remains that individual shareholders have ZERO control over the levels of executive compensation and, as a result, greedy corporate executives are getting away with robbing companies blind without any accountability or risk of having to return some of their excessive compensation.

Under current corporate governance the shareholders are not given a vote on executive compensation outside of approving stock option plans and, based on past attempts, it does not appear likely that shareholders will win the right to vote on this subject. But, a concerted effort to notify the corporations of shareholder concerns and displeasure via e-mails addressed to the shareholder relations department might help the cause. Such an effort would be aided by sending e-mails to all friends and acquaintenses urging them to do the same if they too are shareholders.

Shareholders Fight Back

Objectives of the website

Individual shareholders have very little ability to influence the management of corporations in which they own stock. The vast majority of shareholder sponsored corporate resolutions are voted down. The term “Corporate governance” may be an oxymoron and “transparency” is far from complete.

The objective of the website is to create a shareholder “lobby” with the hope that individual shareholders will have an avenue to influence how their companies are managed and directed.