Wed May 7, 2014
Love, Anger And A $4 Billion Error: Bank Of America's Annual Meeting
Bank of America's annual shareholder meeting in uptown Charlotte Wednesday alternated from a love fest to a shouting match. And one issue hovered over the meeting – the announcement last week that Bank of America made a $4 billion mistake.
The meeting got off to an awkward start.
Bank of America board Chairman Chad Holliday was introducing the board members up for reelection when he was cut off by shareholder Richard Davet, who stood up far from the microphone and objected to holding a vote just a week after finding out about the bank's financial error.
"Mr. Davet, there'll be a time for questions and answers," Holliday said. "Can you hold please?"
He did, but not before asking how the bank could possibly make a $4 billion error. That's how far off Bank of America was in its report to the Federal Reserve about its financial health.
Holliday and CEO Brian Moynihan called it a disappointing mistake that the bank is investigating. But Moynihan said the bank is in good position as it's continued to cut costs and increase profits over the past few years.
"We continue to deliver on our strategy to make our company simpler, stronger and more customer-driven," he said.
He noted the bank's stock price nearly tripled from 2011 to 2013, although this year it's dropped slightly to around $14.75.
Here's what shareholder Judith Koenick thought of that.
"Whoopy duppy do would be my comment, because I remember when the price of the stock was $55 a share, and the dividend rate was $2.56 a share," she said.
Koenick said she lost thousands of dollars when the bank's stock plummeted after the recession. She called Moynihan a liar and kept interrupting the meeting, until another shareholder decided she'd had enough.
Her name is Peggy McMahon, and she started yelling at Koenick to leave Moynihan alone. Koenick yelled back. And Moynihan tried to calm them both down.
At one point, McMahon yelled, "I love you, Mr. Moynihan."
"That makes one of you, thank you," Moynihan said with a laugh. "You and my mother, I've got two now."
The meeting calmed down after that, although shareholders did criticize the bank more for the way it selects board members, its financing of the coal industry, and its mortgage practices.
Rev. Jesse Jackson was there and raised this point:
"We still have 70,000 abandoned houses in Detroit and 80,000 in Chicago," he said. "Is there some plan to appeal to the government to take some of this payback money to invest in infrastructure to rebuild America?"
There were also shareholders who praised the bank for its housing practices. One said he closed on a house this week with the bank's help.
"My kids would very much like to be here," he said. "They're eight and six. And they wanted to specifically ask me to say thank you to the man who made that possible."
But the issue that kept coming back up was the financial error. That mistake is causing Bank of America to hold off on increasing the one-cent dividend it pays shareholders.
The bank couldn't say when that may change or what caused the error. That led Wall Street analyst Mike Mayo to ask this question:
"A simple yes or no question, is Bank of America too big and complex to manage?" he asked.
No, said Chairman Holliday and CEO Moynihan, even though both acknowledged they still need to figure out what happened.