The Value of Experience
Now that the nation’s top public servant is wielding The Donald-like powers over chief executives of bailed-out companies, expectations are high that more heads will roll, and Bank of America CEO Kenneth Lewis is looking like the next contestant on a new economic prime-time drama: The Executive.
Rick Wagoner, ousted as General Motors CEO, had spent more than three decades in the company and had been in the driver’s seat for most of the last one. He also presided over the era of the energy-unfriendly Sport Utility Vehicle and is criticized for sticking with trucks far longer than he should have.
Lewis has been Bank of America CEO for about eight years. He bought CountryWide, the biggest lender after the market went crazy for real estate and was ultimately forced to buy Merrill Lynch as the salad days of Wall Street wilted.
By contrast, Citigroup’s Vikram Pandit has been running things for just about long enough to endure the worst of the crisis, and AIG’s Edward Liddy was installed by the government. Perhaps it’s the longevity of characters like Wagoner and Lewis that make them seem so deserving of a presidential pink slip.
Should investors brace for a wave of executive firings? Certainly any chief with enough stripes to remember the good times and who had his hand out for government aid is looking vulnerable.
It is interesting to recall the argument behind AIG’s odious retention bonuses: these are the guys who got their companies into those messes; they should be the best positioned to get them out. If Lewis does get a presidential veto, that argument will be pretty much lost.
Deals of the Day:
* Raven Russia, a property company focused on warehouses in Russia, agreed to acquire property developer Raven Mount Group for 54.9 pence per share, or 60 million pounds, the companies said.
* Spains’ Santander said it had agreed to sell its 32.5 percent stake in Spanish oil company Cepsa to Abu Dhabi fund IPIC at 33 euros per share.
* Hungary’s government said it is injecting fresh funds into FHB, raising its stake in the mortgage bank beyond 40 percent and helping it compete better with foreign rivals in its home market.
* Australian miner OZ Minerals said it received an alternative rescue bid from Minmetals, after Australia last week blocked the Chinese state-owned firm’s $1.8 billion bid on national security grounds
* A Canadian pension fund has offered $930 million to buy Australian investment firm Macquarie Communications Infrastructure Group, sending MCG’s shares up over 58 percent.
(PHOTO: Donald Trump speaks during a news conference at an Aberdeenshire Council inquiry into the plans for his golf course resort in Aberdeen, northeast Scotland June 10, 2008. REUTERS/David Moir)