BofA CEO faces investors, shares plumb lows

BofA CEO faces investors, shares plumb lows

Stock Market Predictions

(Global Markets) - Bank of America Chief Executive Officer Brian Moynihan will have his work cut out for him next week when he speaks at an investor conference in New York, despite a recent uptick in his bank's stock price.

Shares of the second largest U.S. bank have bounced around a 52-week low and threatened to fall below $5 earlier this week, before central banks pumped more liquidity into the financial system and bank stocks surged.

Moynihan has been shedding assets to build capital and working to cut expenses to improve profits. But investors remain worried about the bank's mortgage liabilities and the strength of its balance sheet.

About the time Moynihan speaks on Tuesday, the bank will also make two top executives available for private meetings with investors.

The bank has notified hundreds of institutional investors about the meetings but only a few are expected to attend, a person familiar with the matter said. It often holds such meetings around investor conferences, the person added.

At least two of the investors invited to the private meetings with co-Chief Operating Officer Tom Montag and Chief Financial Officer Bruce Thompson have been selling Bank of America shares short, a trade that profits if the bank's shares drop. The bank may be trying to charm skeptics, one of the investors said.

Any communication with investors is a positive, said Jon Finger, a Houston-based Bank of America investor, who has been a vocal critic of the bank's recent acquisitions.

"There's a lot of fear and concern about the stock," said Finger, who was not invited to the meetings. "To the extent, the bank communicates with investors and reduces fear, the stock could perform better."

In one email obtained by Global Markets, the bank said it had room for eight to 10 investors to attend a one-hour meeting with Montag at the bank's New York headquarters. The former Merrill Lynch and Goldman Sachs executive runs the bank's global banking and markets unit and added the title of co-chief operating officer after a management shake-up in September.

Executives cannot give investors material nonpublic information, but they can reiterate comments that the bank has already said.

Bank stocks in general have been buffeted by concerns about the European debt crisis and the economy, but Bank of America's shares have been particularly susceptible to wild swings amid concerns about its capital levels.

Bank of America's shares closed at $5.08 on Tuesday, their lowest point since March 2009, but were at $5.63 in late afternoon trade on Friday. As of Thursday, the shares were down 58 percent this year, compared to 27 percent decline in the KBW Bank Index.

This year, Moynihan has made a number of efforts to lay out his strategy for investors but hasn't been able to assuage their concerns about the bank's mortgage liabilities and its ability to meet new capital standards.

The bank held its first investor day in four years in March, but Moynihan's comments about a possible increase in the

bank's dividend came back to haunt him when the Fed denied the request. In August, Moynihan participated in an unusual public conference call with fund manager Bruce Berkowitz but the bank's shares have continued to slide.

Next week, he will be one of a number of bank CEOs to give presentations at the annual Goldman Sachs Financial Services Conference. It will be Moynihan's first conference since his bank's board held a strategy retreat last month.

(Reporting by Rick Rothacker in Charlotte, North Carolina, and Lauren Tara LaCapra in New York, Editing by Dan Wilchins)

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Ramalinga Raju’s Letter to Satyam Board Members - Chairman SEBI - Stock Exchanges

To the Board of Directors
Satyam Computer Services Ltd.

Dear Board Members,

It is with deep regret, at tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice:
The Balance Sheet carries as of September 30, 2008
Inflated (non-existent) cash and bank balances of Rs.5,040 crore (as against Rs. 5361 crore reflected in the books)
An accrued interest of Rs. 376 crore which is non-existent An understated liability of Rs. 1,230 crore on account of funds arranged by me An over stated debtors position of Rs. 490 crore (as against Rs. 2651 [cr.] reflected in the books)
For the September quarter (02) we reported a revenue of Rs.2,700 crore and an operating margin of Rs. 649 crore (24% Of revenues) as against the actual revenues of Rs. 2,112 crore and an actual operating margin of Rs. 61 Crore ( 3% of revenues). This has resulted in artificial, cash and bank balances going up by Rs. 588 crore in Q2 alone.
The gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualized revenue run rate of Rs. 11,276 crore in the September quarter, 2008 and official reserves of Rs. 8,392 crore). The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations — thereby significantly increasing the costs.
Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was that poor performance would result in a take-over; thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten.

The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas’ investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam’s problem was solved, it was hoped that Maytas’ payments can be delayed. But that was not to be. What followed in the last several days is common knowledge.

I would like the Board to know:

1. That neither myself, nor the Managing Director (including our spouses) sold any shares in the last eight years — excepting for a small proportion declared and sold for philanthropic purposes.

2. That in the last two years a net amount of Rs. 1,230 crore was arranged to Satyam (not reflected in the books of Satyam) to keep the operations going by resorting to pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances (Statement enclosed, only to the members of the board). Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving and to ensure prompt payment of salaries to the associates. The last straw was the selling of most of the pledged share[s] by the lenders on account of margin triggers.

3. That neither me, nor the Managing Director took even one rupee/dollar from the company and have not benefitted in financial terms on account of the inflated results.

4. None of the board members, past or present, had any knowledge of the situation in which the company is placed. Even business leaders and senior executives in the company, such as, Ram Mynampati, Subu D, T.R. Anand, Keshab Panda, Virender Agarwal, A.S. Murthy, Han T, SV Krishnan, Vijay Prasad, Manish Mehta, Murali V. Sriram Papani, Kavale, Joe Lagioia, Ravindra Penumetsa, Jayaraman and Prabhakar Gupta are unaware of the real situation as against the books of accounts. None of my or Managing Director’s immediate or extended family members has any idea about these issues.

Having put these facts before you, I leave it to the wisdom of the board to take the matters forward. However, I am also taking the liberty to recommend the following steps:

1. A Task Force has been formed in the last few days to address the situation arising but of the failed Maytas acquisition attempt. This consists of some of the most accomplished leaders of Satyam; Subu D, T.R. Anand, Keshab Panda and Virender Agarwal , representing business functions; and A.S. Murthy, Han T and Murali V representing support functions. I suggest that Ram Mynampàti be made the Chairman of this Task Force to immediately address some of the operational matters on hand. Ram can also act as an interim CEO reporting to the board.

2. Merrill Lynch can be entrusted with the task of quickly exploring some Merger opportunities.

3. You may have a testatement of accounts’ prepared by the auditors in light of the facts that.I have placed before you.

I have promoted and have been associated with Satyam for well over twenty years now I have seen it grow from few people to 53,000 people, with 185 Fortune 500 companies as customers and operations in 66 countries. Satyam has established an excellent leadership and competency base at all levels. I sincerely apologize to all Satyamites and stakeholders, who have made Satyam a special organization, for the current situation. I am confident they will stand by the company in this hour of crisis.

In light of the above, I fervently appeal to the board to hold together to take some important steps Mr T R Prasad is well placed to mobilize support from the government at this crucial time. With the hope that members of the Task Force arid the financial advisor, Merrill Lynch (now Bank of America) will stand by the company at this crucial hour, I am marking copies of this statement to them as well.

Under the circumstances, I am tendering my resignation as the chairman of Satyam and shall continue in this position only till such time the current board is expanded. My continuance is just to ensure enhancement of the board over the next several days or as early as possible.

I am now prepared to subject myself to the laws of the land and lace consequences thereof.

(B. Ramalinga Raju)
Copies marked to:
1. Chairman SEBI
2. Stock Exchanges

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Bank of America grants CEO $6 million in restricted stock

Bank of America grants CEO $6 million in restricted stock

Stock Market Predictions

(Global Markets) - Bank of America Corp (BAC.N) has granted Chief Executive Officer Brian Moynihan restricted stock worth nearly $6 million, although the company must meet performance goals for much of it to pay out, according to a securities filing on Friday.

The stock grants are incentive pay doled out as part of the CEO's 2011 compensation package. For 2010, Moynihan received $9.1 million in performance-based stock.

In 2011, Bank of America earned $85 million in net income applicable to common shareholders, as the second largest U.S. bank sold off assets and took mortgage-related losses. It was the bank's first profitable year under Moynihan, who took charge in January 2010.

The bank's shares fell 58 percent last year as investors worried about whether the company had enough capital to absorb mortgage-related losses and meet new international standards. This year, the stock is up 44 percent, as the concerns eased. The shares closed Friday at $8.02, down 0.9 percent.

Moynihan did not receive a cash bonus for 2011 and did not receive an increase in his $950,000 base salary, a person familiar with the situation said on Friday. The stock grants disclosed on Friday equal all of the incentive-based pay he received for 2011, the person said.

The Charlotte, North Carolina-based bank will disclose more information about executive pay in its proxy filing next month.

Moynihan received 532,705 performance-based shares, worth $4.1 million as of Wednesday's grant date. These shares vest only if the bank meets unspecified performance measures.

The shares cannot be paid out until March 1, 2015. If they are not earned by December 31, 2016, they expire.

Similar performance-based shares granted by the bank last year required the company to post a minimum return on assets - net income compared with total assets - of 0.5 percent on a rolling annual basis. In the first year for that grant, the bank did not meet the minimum hurdle.

Moynihan also received 228,302 stock units this week that will vest in 12 monthly portions and be paid out in cash, based on the company's stock price, starting in March. As of Wednesday's grant date, they were worth about $1.8 million. He did not receive this type of stock for 2010.

Seven other Bank of America executives also received various stock grants this week, according to securities filings on Friday. Co-chief operating officer Tom Montag, a former Merrill Lynch executive who runs capital markets and investment banking operations, received the largest performance-based stock grant, worth about $7.1 million. That was down from a $14.3 million grant for 2010.

Net income in Montag's global banking and markets unit fell by more than half to $3 billion in 2011 from $6.3 billion in 2010, as investors and corporations pulled back amid uncertainty over the European debt crisis.

Some senior executives who report to Moynihan received cash bonuses for 2011, the person familiar with the situation said. Performance-based stock grants, however, made up the largest portion of their incentive pay, the person said.

In January, Bank of America said it would issue as much as $1 billion in stock to certain employees in lieu of a portion of their cash bonuses. Unlike restricted stock grants, however, the shares would be immediately tradable. Bonuses were paid out to employees this week.

(Reporting By Rick Rothacker; editing by Andre Grenon)

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