Shareholders Oust Bank of America Chief as Chairman

Bank of America shareholders stripped Kenneth D. Lewis of his chairman’s title on Wednesday while allowing him to remain president and chief executive officer, in a vote that may mark the beginning of the end of his leadership at the embattled bank.

Walter E. Massey, the former president of Morehouse College and a longtime board member, will succeed Mr. Lewis as chairman, the bank said.

Earlier, at an annual meeting here that was widely viewed as a referendum on Mr. Lewis, Bank of America shareholders re-elected him to the board, along with the company’s 18 directors, by “a comfortable margin,” a spokesman said. But the vote to separate the chairmanship from the company’s executive leadership raised questions about how much longer Mr. Lewis could steer the bank as shareholder anger mounts over his handling of the bank’s takeover of Merrill Lynch.

Mr. Lewis has worked at the bank and its predecessors for 40 years and run it as chief executive since 2001.

During Mr. Lewis’s tenure, Bank of America has more than doubled its deposits and expanded its credit card and mortgage operations, largely through his supersized acquisitions.

But his most recent conquest, Merrill Lynch, brought the bank to its knees. That merger is under investigation by the attorney general of New York, and some shareholders say Mr. Lewis did not do enough due diligence and overpaid for the troubled investment bank. As Merrill’s results weakened just before the deal closed, Mr. Lewis did not disclose the problems to shareholders even as he discussed additional aid with the government.

News cameras began setting up Wednesday before 7 a.m., just as some of the bank’s employees were arriving at work. A few protesters trickled in with signs. One, Judy Koenick, wore a T-shirt that read: “Fire!!! Kenneth Lewis/Fire!!! The board of directors./Clean Sweep.”

In prepared remarks at the meeting, which brought 2,200 people to the Charlotte Performing Arts Center, Mr. Lewis defended the bank’s purchases of Merrill and another troubled financial institution, Countrywide Financial, a lender heavily involved in the subprime mortgage meltdown.

“Let me be clear: Merrill Lynch and Countrywide led the way for our first-quarter earnings,” he said. “Today I can state without reservation that these acquisitions are not mistakes to be regretted. Both are looking more and more like successes to be celebrated.”

When Mr. Lewis was asked about the bank’s choice not to disclose Merrill’s weakened state, he said he could not talk about it.

“I can’t because of litigation. You’re probably one of them,” he quipped. “So if you’d like to hear more, withdraw your lawsuit.”

Several shareholders made statements of support for Mr. Lewis. “Look over your shoulder, Mr. Chairman, we’re behind you,” one said. There was loud applause for each such statement.

But the bank has plenty of angry shareholders, including pension funds like Calpers and Calstrs, two public funds in California; CtW Investment Group, which represents unions’ pension funds; and individual stock owners like Jerry and Jon Finger, who sold their bank in Texas to Bank of America 10 years ago in exchange for stock.

Bank of America executives insist that Merrill will benefit the bank over the long run, in particular because of its herd of financial advisers. And in the first quarter, Merrill helped bolster the bank’s earnings.

“Every major commercial bank in the country is under pressure,” Mr. Lewis told shareholders. “I think any assumption that without Merrill our stock price or dividend would be where they were in September is terribly mistaken.”

Still, some shareholders believe that Merrill will not earn enough money to make up for the stock dilution and the extra $20 billion that the bank accepted from the government in January to help with the merger. The bank is on the hook for $45 billion in taxpayer money in total, and it is currently disputing some of regulators’ findings in the financial stress tests.

On the subject of the taxpayer money, Mr. Lewis said at the meeting that “we share the desire to pay it back as soon as humanly possible.”

Bank of America’s stock fell more than 90 percent in the last year from $37 a year ago to $3.14 in March. Since then, it has recovered some and closed at $8.68 on Wednesday.

Just a year ago, the board of Wachovia, a bank that was headquartered here, took the chairman title away from that bank’s chief executive, Ken Thompson. It was only a month until Mr. Thompson lost his job altogether. Wachovia was later sold to Wells Fargo.