BofA Chairman forms search committee

Bank of America Corp. (BofA) Chairman Walter Massey has formed a search committee to find a new CEO to replace Ken Lewis, according to people familiar with the situation.

Two executive search firms, Spencer Stuart and Heidrick & Struggles, reportedly are in the running to present qualifications to the committee. Spencer Stuart has been working with BofA on board selection matters since earlier this year. Heidrick & Struggles has assisted the bank with management selection and recruiting senior-level managers over the course of the past decade.

BofA has added nine new board members in 2009, replacing former directors such as lead chair Temple Sloan and (Ret.) Gen. Tommy Franks with new members, including Dupont Chairman Charles Holliday who was named last month and four other directors who were named in June. This follows the addition of three new Merrill directors who joined the board in January. The bank also recently hired former Citi executive Sallie Krawcheck to run its global wealth management and advisory business while also consolidating several other senior roles in the bank's global consumer and investment units. Whether Krawcheck will be considered as an internal candidate to replace Lewis as CEO remains unclear.

The bank has no official CEO succession plan in place, nor does it have a contingency plan should current management face indictment as a result of ongoing litigation. Both Lewis and Massey have been subpoenaed in an ongoing investigation into the Merrill Lynch acquisition by New York Attorney General Andrew Cuomo. They also have been named as individual parties in an Ohio lawsuit, which seeks damages resulting from alleged misrepresentation of shareholder interests.

The combination of disarray at the highest governance levels, addition of nine new board members in a single year and the perceived taint hanging over the current day-to-day regime strongly suggests that BofA will turn outside the bank to find new leadership.

Whether that translates into a short-term or long-term CEO remains open to speculation until an interested and qualified candidate surfaces. Such a candidate will be expected to meet the strong approval of both the bank's overhauled board, key investors such as former Chairman and CEO Hugh McColl and the federal government.

BofA's two clearest options to fill the CEO post include:
1.) Bill Winters, former co-head of JP Morgan Chase's investment bank. Winters left Chase earlier this week following an executive shake-up. Winters played a pivotal role in the bank's success and had a birds-eye view of how his widely respected boss, Jamie Dimon, led during a similar period of upheaval. For a good summary, see http://blogs.harvardbusiness.org/cs/2009/10/what_the_jpmorgan_chase_shakeu.html. Dare we suggest Dimon himself to rescue the country's largest bank? According to the attached piece, his chief regret seems to be not serving his country. Ah yes, life is good at the top.

2.) Naming one of the current new "insider/outsider" board members as CEO. Spencer Stuart followed the same model at Delta when Richard Anderson was named CEO after joining the board prior to becoming the airline's top executive. This practice has grown increasingly common for boards and companies facing turmoil. Success depends largely on transparency and how relationships on the board coalesce around a chosen leader.

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