Weill Withdraws Bid to Replace Armacost As Chief Executive of BankAmerica Corp.
Rebuffed by BankAmerica Corp.'s board of directors for the second time in as many months, financier Sanford I. Weill on Tuesday withdrew his bid to become chief executive officer of the nation's second largest banking company.
Meanwhile, BankAmerica also shuffled its senior management, naming Thomas W. Cooper, 49, to the new post of president and chief operating officer of its chief subsidiary, Bank of America, a move that relieves BankAmerica president and chief executive officer Samuel H. Armacost of day-to-day responsibility for managing the bank.
In addition to his title as chief executive of the bank, Mr. Armacost was named chairman of the bank, a new post for him.
Mr. Weill had proposed raising a $1 billion in new capital for the bank if the board would install him as chief executive in Mr. Armacost's place. Mr. Weill alluded to a plan of changes in management and organization at the bank, which lost $337 million in 1985. But the details were never made clear either to the public or to the bank's board, which rejected Mr. Weill's offer in its Monday board meeting in Los Angeles.
"It has been my intent that my proposal to BankAmerica be a friendly one," Mr. Weill said in a statement. "In view of yesterday's announcement by the bank to pursue their own plan for the future, I am withdrawing my offering, and therefore I release Shearson Lehman Brothers Inc. from its commitment to raise $1 billion in equity capital."
On word of Mr. Weill's decision, BankAmerica stock dropped steeply Tuesday, closing at 15-1/2 down 7/8 on heavy volume.
Mr. Weill, the former American Express Co. president who built Shearson into a Wall Street powerhouse, was backed by his former firm in his effort to unseat Mr. Armacost.
Sources said that they doubted the financier would send his extensive plan for changes to the bank now that his challenge had been withdrawn. They said his plan had been backed by a letter from an insurer offering to reestablish directors and officers' liability insurance if Mr. Weill made chief executive. Last spring, the bank lost its outside policy and has been self-insuring its officers and directors since. The identity of the insurer mentioned in the letter could not be established.
Mr. Armacost's strength among board members was highlighted in striking fashion Monday afternoon when management was asked to leave the boardroom so that outside directors could consider Mr. Weill's plan. Often having to leave a boardroom is a foreshadowing of doom for a company's managers.
However, Mr. Armacost pulled a trump card in having John H. Gutfreund, chief executive officer of Salomon Brothers Inc., brief the board on teh Weill plan. Arguably the most powerful man in the nation's capital markets, Mr. Gutfreund reportedly told board members that there was no need to raise a capital now, and that his firm stood ready to raise any money, with no strings attached, should an opportune time arise.
In installing Mr. Cooper in the newly created position at the bank, BankAmerica's board of directors left Mr. Armacost as president and chief executive officer firmly in charge of the company, but removed him from the day-to-day management of the company's principal subsidiary, Bank of America.
Mr. Cooper joined Bank of America in March last year, coming from Mellon Bank Corp., where he had been vice chairman in charge of the retail and middle-market activities of subsidiaries. He had been president of Girard Co. prior to its acquisition in 1983 by Melllon. And, according to sources, …