A JONES SCHOOL FACULTY FORUM, FEATURING JERRY AND JON FINGER
Thursday, September 24, 2009
Program (Shell Auditorium) - 6:30pm - 7:45pm
Reception (Anderson Family Commons) - 8:00pm
Co-Sponsor: National Association of Corporate Directors (NACD)
Reservations required: jonesgsm.rice.edu/FacultyForum
The Jones Graduate School of Business Faculty Forum offers the opportunity to gain an inside perspective on corporate governance issues coming to the fore as the corporate landscape shifts in response to the financial and economic crisis. Jerry and Jon Finger, Bank of America shareholders, provide a first-hand account of their campaign to un-seat three Bank of America directors, including Chairman and CEO Kenneth Lewis, and of their lawsuit against BofA. The Fingers, acting on their conviction that the board and management failed to protect shareholder interests in the Merrill Lynch acquisition, worked to change the governance of the bank. In response to the pressure exerted by this campaign and other shareholder initiatives, on April 29, 2009, a majority of Bank of America shareholders voted to strip the office and title of Chairman from CEO Kenneth Lewis. This shareholder action has been hailed as an unprecedented victory for shareholders.
Background
In March 2009, Jerry and Jon Finger, long-term owners of Bank of America common stock, launched a “vote no” campaign to persuade BAC shareholders to vote for a change in governance at the bank’s April 29, 2009 annual shareholder meeting. Asserting that the board of directors and senior management did not meet their responsibilities to shareholders, Finger Interests urged shareholders to vote against the board re-election of Kenneth Lewis, Chairman and CEO; O. Temple Sloan, Jr., Lead Director, Compensation and Benefits Committee Chair, and Executive Committee Chair, and Corporate Governance Committee member; and Jacqueline Ward, Asset Quality Committee Chair.
The Fingers also urged shareholders to support several other “good governance” proposals in the 2009 proxy vote. These included proposals requiring a separation of the Chairman and CEO positions, requiring an advisory vote approving executive compensation, and limiting executive compensation.
In a letter to shareholders, the Fingers stated “We are asking shareholders to vote for a change in the corporate governance and the culture of Bank of America. We seek to change the culture away from a mentality that emphasizes size, market share and geographic footprint, toward a focus on risk-reward with respect to allocating shareholder capital and toward protecting and building shareholder value. Part of this change would include disciplined transparency and full disclosure to shareholders and regulatory authorities.
As mentioned before, the Bank of America Board of Directors stripped the title, and more importantly, the official position of Chairman from Kenneth Lewis and elected Walter E. Massey, PhD., to the office of independent Chairman of the Board. Over the past several months Dr. Massey has appeared to exercise considerable independence in his capacity as Chairman.
Finger Interests Number One, Ltd. also filed a lawsuit again Bank of America in U.S. District Court. The suit charges that bank management and the board unlawfully concealed material information from shareholders prior to the December 5, 2008 shareholder vote approving the acquisition of Merrill Lynch.
In a March 13, 2009, Finger Interest press release, Jerry Finger is quoted regarding the failure of the board and management to protect shareholder interests in the Merrill Lynch acquisition.
“We believe the board allowed management to pursue acquisitions that have permanently reduced shareholder value through dilution, particularly with the acquisition of Merrill Lynch approved by shareholders without access to full disclosure on December 5, 2008. The board – including its leadership - and management knew, or should have known, of massive fourth quarter losses at Merrill during October and November prior to the shareholder vote, but did not communicate those losses or amend the proxy that shareholders used to vote on the merger.”
“Had the losses been disclosed up until late December 2008, shareholders could have taken action to halt the merger,” Jerry Finger continues. “Except for the material omissions and failure to amend the proxy statement, BAC shareholders either would not have approved the merger or would not have approved it as proposed. My background has given me an accurate understanding of fiduciary responsibility – and I am convinced that the current Bank of America board and management failed in their responsibility to protect the interests of shareholders on the Merrill Lynch acquisition.”
Featured Speakers -
Jerry E. Finger is managing partner of Finger Interests, Ltd., an investment management firm located in Houston, Texas. His firm primarily invests, develops and owns real estate and marketable equity and debt securities. Finger Interests owns Ambassador Life Insurance Company. Mr. Finger has had a long career in the banking industry. He opened his first bank in 1963 and was founder, chairman and CEO of Charter Bancshares, Inc., and was a director of six publicly held companies. He was born in Houston, graduated from Williston Academy, attended Tulane University and graduated from the Wharton School at the University of Pennsylvania in 1954. He served aboard ship as a line officer in the U.S. Navy. He presently is an Adjunct Professor at the Jones Graduate School of Management. Mr. Finger also serves in many civic capacities; among them: M. D. Anderson Cancer Center Board of Visitors; Methodist Hospital Center for Performing Arts Medicine Board; Foundation of the National Archives Board; Executive Committee and Board for the Alley Theatre; Inprint, Inc. Board; Anderson Ranch Board; Theater Masters in Aspen; Council of the Overseers at Jones Graduate School, Rice University. He is on the board of the Financial Institutions Center at the Wharton School, having previously long served on the Board of the Wharton School. Over the years, he has prior service as a board member and/or chief executive of numerous other civic and philanthropic organizations. He is a member of the Chief Executives Organization.
Jonathan S. Finger is a Partner of Finger Interests, Ltd. and has almost 20 years of business experience in commercial banking, investment banking, fiduciary and investment management services, insurance and principal investing. The majority of his career has been in investment management and fiduciary services both on behalf of clients and affiliated entities. Prior to becoming a partner at Finger Interests in 1997, Mr. Finger was Senior Vice President of Investment Management and Trust Services at Charter National Bank. During his tenure, total assets of the investment management and trust area grew from $30 million in 1991 to $300 million in 1997. In addition, Mr. Finger was responsible for International Banking, Retail Brokerage Services and Investor Relations at Charter. Prior to joining Charter Bank, Mr. Finger was an investment banker in the Financial Institutions Group and the Merger and Acquisitions Departments at Drexel Burnham Lambert and worked in Equity Research at Lehman Brothers. He is a graduate of the University of Virginia and received his M.B.A. from the Wharton School at the University of Pennsylvania.
Moderators -
Edward Williams is the Henry Gardiner Symonds Professor of Management in the Jesse H. Jones Graduate School of Management and Professor of Statistics at Rice University. He is also a member of the Board of Directors of several companies including that of Service Corporation International (listed on the NYSE), the largest funeral home/cemetery company in the world. He has also been involved in starting, buying, and/or selling numerous companies. He came to Rice as Professor of Administrative Science in 1978. At the Jones School, he teaches classes on entrepreneurship, business valuations, leveraged buyouts, and acquisitions of existing concerns. Professor Williams has had the highest teacher evaluation of any faculty member at Rice University. On seven separate occasions, he has been the recipient of the Teaching Excellence Award, being voted by the alumni of the Jesse H. Jones Graduate School as the most effective teacher in the school.
Dr. Williams has published numerous academic articles in entrepreneurship and finance and several books including the Business Planning: 25 Keys to a Sound Business Plan (1999, New York Times Pocket MBA Series, New York: Lebhar-Friedman Books).
George Kanatas is the holder of the Jesse H. Jones chair in Finance. He earned a doctorate in economics from The Johns Hopkins University. Professor Kanatas has been a senior member of the Jones School finance faculty research group since he joined Rice University in 1994. He has taught financial economics at Rice and at several other universities, to students at all levels, from undergraduates to executives and doctoral students. His teaching has been in corporate finance, financial markets, banking, international finance, managerial economics, and financial theory. In addition, he served in 1983 as a full-time consultant on regulatory issues to the Federal Reserve Bank of Chicago. His work with industry has been in the areas of capital investment, strategic financial analysis, and bank regulations. In addition, he worked for a short time as a physicist on the Saturn engine program at the George C. Marshall Space Flight Center.
Dr. Kanatas has published numerous articles in the leading finance journals on issues in financial economics, as well as a couple of papers in nuclear physics. He is a member of the American Economic Association, American Finance Association, and Financial Management Association.
THERE IS NO CHARGE FOR THIS PROGRAM. RESERVATIONS ARE REQUIRED.
RSVP at jonesgsm.rice.edu/FacultyForum For additional information contact: Sue Klein sue.klein@rice.edu 713-348-3710
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