michael mayo

Bank of America's Moynihan tops list of worst performing CEOs

May 9, 2012: 6:00 AM ET

B of A CEO Brian Moynihan

Morgan's Gorman and Citigroup's Pandit follow close behind.

FORTUNE -- Here's something Bank of America (BAC) shareholders might want to discuss at the firm's annual meeting: Based on its stock performance, Brian Moynihan ranks as the worst big bank CEO in the United States. And that's after this year's 40% rally in the bank's shares.

On Wednesday, B of A shareholders will congregate in Charlotte for the bank's annual meeting. Among other things, shareholders will vote on whether to approve the pay packages of Moynihan and other executives. The majority of shareholders are expected to approve the payouts, in part because Moynihan took a pay cut of $3 million, making his $7 million payout for 2011 one of the smallest among bank CEOs. Based on the company's stock market performance, though, you might wonder if even that payout is too high.

Michael Mayo, a bank analyst at Credit Agricole Securities, recently ranked current bank CEOs by the relative performance of their shares during the time since they took over the banks. Moynihan became the CEO of B of A in early 2010. Since that time the bank's shares have fallen 42%. That puts Moynihan at the bottom of the heap. It's not just the stock market performance. Mayo says there are a number of things that Moynihan has done wrong. One of the biggest was the bank debit card flip-flop, which turned off customers despite B of A eventually deciding under pressure that it wasn't going to charge the fee afterall. What's more Moynihan, like other bank CEOs, was slow to stem the problems in its mortgage servicing division, which led to the $25 billion industrywide settlement with state AGs.

The one positive, perhaps, for Moynihan, is that CEOs of other large banks aren't far behind. Shares of Morgan Stanley (MS) are down 39% since James Gorman started as the head of that firm, also in early 2010. Citigroup's shares are down a whopping 89% since Vikram Pandit took over the job as CEO of Citigroup (C). But that includes the heart of the financial crisis, which are not included in Moynihan's or Gorman's figures. The best performing CEO, according to Mayo, was Jim Rohr, who heads up PNC Financial Services Group (PNC). Since taking the helm of the Pittsburgh-based bank in mid-2000, making Rohr the longest service top bank CEO, the banks shares are up 43%.

"In the past banks were able to grow out of their problems," Mayo said, speaking this week at the CFA Institute's annual conference in Chicago. But Mayo said bad loans, new capital requirements and a lack of opportunity means that's not going to be able to happen this time around. He predicts this will be the worst decade for sales growth at the banks since the 1930. "Citigroup and B of A should not be their current size. They need to shrink."

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