Supported by
Bank of America Board Under Fire for Combining Chairman and Chief Jobs
Momentum is building toward forcing Bank of America to undo its decision last year to name the bank’s chief executive, Brian T. Moynihan, as chairman as well.
Opposition to the board’s decision to once again combine the positions is coming from both big public pension funds and influential shareholder advisory firms that counsel investors on how to vote on corporate issues.
Institutional Shareholder Services, on Friday, became the second proxy advisory firm to recommend that shareholders vote against a board proposal that would let Mr. Moynihan, 55, keep the title of chairman. The recommendation by I.S.S. was announced in a note.
The move by the board last October angered some shareholders, who have said the positions needed to be remain separate to ensure better management. The chairman and chief executive jobs had been separate at the bank since 2009, until the board decided on its own initiative to combine them.
The proxy firm was careful to note that the vote is not a referendum on Mr. Moynihan’s stewardship of the bank, but rather of the bank’s board, which has shown questionable leadership, it said. Just four of the board’s 13 members, the proxy firm said, have significant banking experience.
A few days earlier, Glass Lewis, another proxy advisory firm, similarly recommended that shareholders vote down the board proposal. Two big public pension funds already have said they will follow suit.
The bank has scheduled a special meeting on Sept. 22 for shareholders to vote.
In its report, I.S.S. harshly criticized the Bank of America board for keeping the vote on the combined chairman and chief executive role off the ballot at the bank’s annual meeting, calling it a “cynical effort to silence shareholder dissent.”
According to I.S.S., it was Mr. Moynihan himself, not the other board members, who took the initiative to put the issue to shareholders in a special vote.
“That the board did not foresee the controversy is indicative of the directors’ failure to keep their fingers on the collective pulses of the company’s owners,” according to the I.S.S. report.
In recent years, proxy advisory firms have endorsed proposals to require companies to split up the jobs of chief executive and chairman. Shareholder activists say it helps foster greater board independence.
In October, the board appointed Mr. Moynihan, who became chief executive in 2010, as chairman, succeeding Charles Holliday in that role. Mr. Holliday remains on the bank’s board.
In naming Mr. Moynihan as chairman, the board also said that Jack Bovender Jr., would become the bank’s lead independent director. The board had hoped that move would quiet shareholder opposition.
But the decision to add the chairman title to Mr. Moynihan’s job responsibilities proved controversial because in 2009 shareholders had voted to strip Kenneth D. Lewis, then the bank’s chief executive, of his chairman title in the middle of the financial crisis.
I.S.S. noted that another large bank, Citigroup, which also faced serious problems in the lead-up to the financial crisis, has an independent chairman. By contrast, JPMorgan Chase has a combined chief and chairman in Jamie Dimon and has demonstrated “failures of risk oversight” that have led to “significant losses and regulatory action,” I.S.S. said.
Two large public pension funds, the California Public Employees’ Retirement System and California State Teachers’ Retirement System, already have said they will vote against the board’s proposal. Their ownership amounts to less than 1 percent of all shares, but their vote carries symbolic importance.
The bank has argued that Mr. Moynihan deserves to hold the title of chairman and that other big United States banks also combine the positions.
“The board is asking for the same flexibility that 97 percent of S.&P. 500 companies already have in determining its leadership structure,” the Bank of America spokesman Lawrence Grayson said in an interview Friday night.
Explore Our Business Coverage
Dive deeper into the people, issues and trends shaping the world of business.
A Billionaire Online Warrior: Bill Ackman, an obstinate hedge-funder who loves a public crusade, has used X to push himself into a new realm of celebrity.
Cancel Smartphones: The N.Y.U. professor Jonathan Haidt became a favorite in Silicon Valley for his work on what he called the “coddling” of young people. Now, he has an idea for fixing Gen Z.
Landline Pride: Traditional phones may seem like relics in the iPhone era, but a recent AT&T cellular service outage had some landline lovers extolling their virtues.
C.E.O. Dreams: Fresh business school graduates are raising “search funds” from willing investors to buy companies they can lead.
Nelson Peltz Wants Respect: The longtime corporate agitator feels misunderstood. Maybe his fight with Disney could change that.
The Palm Oil Supply Chain: An E.U. ban on imports linked to deforestation has been hailed as a “gold standard” in climate policy. Southeast Asian countries say it threatens livelihoods.
Advertisement