Bank Of America Essay

3061 words - 13 pages

DATE DUE: 17th APRIL 2015

Table of Contents
Summary. 3
Ethical Dilemma. 3
Affected Stakeholders. 4

Ken Lewis was a Chief ...view middle of the document...

As a chairman and CEO of Bank of America, Ken Lewis was responsible to inform shareholders about the acquisition of Merrill Lynch and Countrywide financial so he can get feedback and possible advice if the deal is worth to go on or not, but he didn’t inform shareholders and went on completing the deals which proved to be career enders.
A salary cap of $500,000 introduced by Obama Administration for all executives of banks made no choice for many CEO’s rather than leave for other banks who were not affected by the financial meltdown. Many CEO they wanted more salaries that’s why they went for banks which were ready to pay them more than $500,000 and maintain their highly stylish life.
One of the responsibilities of the top manager is to make sure to serve for the benefits of the company and not for self-interest. Merrill Lynch CEO John Thain, failed to be responsible of the situation in the company and spent $1.2 million for his own interest.

Affected Stakeholders.
Stakeholder is a person, group or organization that has interest or concern in an organization, OR anyone who is directly affected by the corporation such as investors, employees, customers, and suppliers. Apparently many companies have started to view stakeholders as anyone within a community or anyone who could potentially be affected by a company’s decisions. In this case we see shareholders impacted by the decision of Bank of America CEO Ken Lewis. He lied to all of the shareholders and covered up the fact that Merrill Lynch and Countrywide financial companies had been involved in highly unethical and illegal business dealings and they were both on the verge of bankruptcy. Due to poor decisions by Ken Lewis, BOA stock was down 65 percent and almost 90 percent over the preceding 52 weeks. Shareholders were very furious with Ken Lewis and decided to remove him as chairman while allowing him to remain as CEO.

The decision by the Obama administration to introduce a $500,000 salary cap for all executives of banks receiving bailout dollars could prompt personnel to leave for other banks which did not receive bailout dollars. The only option for CEO’s who were affected by salary cap was to leave for other banks which didn’t affected by the financial meltdown, and they are willing to pay CEO’s more than $500,000 salary. The reason for the CEO’s to switch companies/Banks would be the fear to lose their highly luxurious life because they get used to receive much more salary but now due to financial meltdown they won’t be able to receive that kind of salary they used to which means they are purchasing power will be low as well.
It is definitely unethical behavior for CEO’s to leave for other banks because of $500,000 salary cap introduced by Obama administration. As CEO’s they should stand with their company and work together in a difficulty time in order to improve the situation of the company instead of living and go somewhere else to gain more interest.

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