A star’s rise to the top at Bank of America

This year would be his last. After spending four decades at the bank, Lewis, 62, told them he had decided to retire at the end of December, instead of staying on for another year or two as initially planned.

The meeting sent Bank of America’s board scrambling to find a replacement, launching a 10-week search process that involved dozens of meetings and endless speculation about who would lead the nation’s biggest bank. Finally, Bank of America revealed on Dec. 16 it had found its next leader: Wellesley resident Brian Moynihan, a 50-year-old former securities lawyer who steadily climbed the ranks of FleetBoston and then Bank of America.

But picking Moynihan was hardly a foregone conclusion on that autumn Monday afternoon in Boston.

The board was already in the midst of making emergency succession plans - figuring out who to appoint as an interim CEO if Lewis suddenly fell ill - but didn’t have a permanent successor lined up.

“We were surprised,’’ recalls board chairman Walter Massey. “Ken had only made up his mind recently, but said he had given it a lot of thought.’’

Massey, who was summering on Cape Cod, was one of three directors at the Boston meeting that day. The other two were former FleetBoston CEO Charles K. Gifford, who helped engineer the bank’s sale to Bank of America, and NStar chief executive Thomas May. The meeting, which lasted several hours, was held in May’s office.

Lewis originally planned to brief the full board at its next meeting at the bank’s Charlotte, N.C., headquarters the following Friday. But two days after the Boston meeting, Anne Finucane, the bank’s chief marketing officer who is based in Boston, warned Lewis the news might not wait. Later that day Lewis briefed the full board on a conference call. Lewis, who began his career as a loan officer at North Carolina National Bank, which eventually became Bank of America, told directors he always felt he’d know when it was time to retire. That time had come.

Two days later, the board kicked off its search by forming a six-person committee.

Massey, a former president of Morehouse College, chaired the committee. It also included three New Englanders - May, Gifford, and CVS Caremark Corp. chief executive Thomas Ryan - all former FleetBoston directors who joined the Bank of America board when the bank bought the New England institution five years ago. But they were picked because they were current or former CEOs and chaired key bank committees, May said.

The search committee also included two new directors, Charles Holliday Jr., a former DuPont chairman, and Donald Powell, former chairman of the Federal Deposit Insurance Corp.

Over the next two and a half months, the committee met roughly 30 times, mostly on weekends at various locations in New York, including the upscale Waldorf Astoria and Four Seasons hotels. “It ruined my fall,’’ May groused.

At an early meeting, board members also came up with a lengthy list of qualities the board was seeking in an ideal candidate - everything from leadership to financial industry expertise. “We were looking for Jesus Christ with banking experience,’’ one member of the committee joked. By mid-October, the bank hired executive recruiter Russell Reynolds to assist with the search.

The committee originally came up with a list of 100 possible candidates, including CEOs and other high-ranking executives at major financial institutions. At least five worked at Citigroup alone. Some of the candidates they contacted said they weren’t interested, narrowing the list.

Because Bank of America accepted $45 billion in gov ernment bailout funds, it faced strict limits on executive compensation, making it harder to entice some candidates. The bank repaid the loan in early December, just before it made its final selection.

In addition, Bank of America also faced heightened scrutiny from Washington and state regulators, making the job less attractive. The House Committee on Oversight and Government Reform held five hearings to examine the bank’s acquisition of troubled investment bank Merrill Lynch & Co. At one point, the committee called Moynihan and two directors, Gifford and May, to testify on Capitol Hill. Separately, the Securities and Exchange Commission sued the company, accusing it of misleading investors. And the New York attorney general launched its own investigation.

The board also considered six internal candidates. In addition to Moynihan, the board interviewed Gregory Curl, chief risk officer; Sallie Krawcheck, head of global wealth management; Joseph Price, chief financial officer; Thomas Montag, investment banking chief; and the head of insurance and mortgage banking, Barbara Desoer.

Lewis recommended the board promote from within, following a bank tradition. His first choice was Curl, one of his longtime lieutenants, according to an official briefed on the recommendation, who was not authorized to comment. His second choice was Moynihan, whom Lewis recently promoted to run the bank’s sprawling consumer banking unit.

But board members were divided over whether to go inside or outside the company.

Some felt it would be less disruptive to go with a current executive who already knew the bank and could help retain the rest of the management team. Others wanted a fresh start, especially because the bank had recently reported a $1 billion loss and several executives were caught up in probes of the Merrill Lynch deal.

“It’s a fact there were factions,’’ May acknowledged.

Shareholders and analysts were split as well. The process also dragged on longer than expected - blowing past a self-imposed Thanksgiving deadline - making some investors uneasy. The board added some candidates who weren’t on the original list, while crossing off others. “It wasn’t a strictly linear process,’’ Massey said.

Candidates weren’t always sure where they stood, either. Moynihan, who met with the search committee at least three times, said he tried to avoid worrying about whether he’d get the promotion and focused on his regular duties. While the search process was going on, he revamped the way the bank handled overdraft fees and credit cards, addressing complaints from consumers and regulators. “I just kept doing my job,’’ Moynihan said.

Eventually, board members came up with a short list of candidates, including Moynihan and Curl. The leading external candidate was Bank of New York Mellon chief executive Robert Kelly.

Kelly couldn’t be reached for comment.

Negotiations with Kelly didn’t go well, said people close the matter, who were not authorized to comment publicly. Kelly wanted to be both CEO and chairman - even though shareholders recently voted to split the jobs - and to move headquarters from Charlotte to New York, a move that would probably offend some longtime employees and North Carolina politicians. Kelly also wanted as much as $40 million during his first year, partly to reimburse him for stock options he’d give up if he left Bank of New York. While such packages were common on Wall Street, it would risk offending politicians and regulators at a time when Bank of America was facing unusual scrutiny.

All three demands made committee members uncomfortable. And ultimately, they never formally offered Kelly the job, opting to recommend Moynihan instead. Board members noted that Moynihan had a breadth of experience at the bank, including key posts in wealth management, legal services, and investment banking.

“When you are in negotiations, you learn a lot,’’ Gifford said. “We learned during this whole process that we have a guy who knows the company and knows the people.’’

Moynihan also had an advocate on the board. Gifford had worked with Moynihan for years at FleetBoston, before the company was acquired by Bank of America, so Gifford could vouch for Moynihan’s intelligence and experience.

At 6 p.m. on Dec. 16, the full board met in the 60th-floor boardroom in Bank of America’s Charlotte headquarters to vote for a new CEO. Fourteen directors were there in person, while one board member listened via phone. Some asked pointed questions. But the vote was unanimous for Moynihan.

Moynihan, who was working in an office two floors below, was told the board needed to see him. When he walked in, he was greeted with a round of applause and several hugs. “It’s a tremendous honor,’’ Moynihan said later.

Afterward, Moynihan headed to a nearby bar to have a celebratory drink with Lewis and other senior executives, before returning upstairs to call the Charlotte mayor and others. Just after 11 p.m., he and two co-workers from Boston headed to the Ritz-Carlton hotel lounge for a late dinner - sliders, pizza, and beer.

Others in the bar quickly noticed. For the next half hour, people streamed up to Moynihan to shake his hand, ask for his autograph, or take a picture with him.

Moynihan, once an obscure executive living on the outskirts of Boston, had become the brightest star in the banking world.

Todd Wallack can be reached at twallack@globe.com.