Two key proxy advisory services are urging Bank of America shareholders to vote against some of the bank’s directors after the board’s decision last fall to combine the CEO and chairman roles.
Institutional Shareholder Services recommended stockholders vote against all four members of the board’s corporate governance committee at the May 6 annual meeting, while Glass Lewis suggested a “No” vote against just the committee’s chairman, Thomas May.
In October, the Charlotte-based bank’s board rolled back a bylaw change approved by shareholders in 2009 that required an independent chairman and handed the title to CEO Brian Moynihan. Stockholders will not get a chance to vote on the issue at the May meeting, but the proxy advisory firms said they should show their disapproval by voting against certain directors.
“If there is a lesson for (Bank of America) shareholders, it is that binding shareholder votes are meaningless in the face of a board that chooses not to abide by them,” ISS wrote in its report. “...The old adage (that) it is easier to ask forgiveness than it is to seek permission is not a principle of good governance.”
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ISS said it asked Bank of America if it attempted to talk to shareholders before making the change and the bank confirmed that it did not, citing a “desire to avoid media attention.” ISS said the bank did not want a vote on the change after the fact because it could be interpreted as a referendum on Moynihan at a time when the bank was seeking stability.
ISS is urging shareholders to vote against directors Sharon Allen, Frank Bramble and Lionel Nowell, as well as May. Proxy advisory firms can play an influential role in corporate governance votes, but it’s unusual for directors to lose re-election.
Corporate governance experts generally favor a separate chairman and CEO because it gives the board a stronger check on management. But many large banks, including Wells Fargo and JPMorgan Chase, combine the roles.
Bank of America shareholders voted to split the titles in 2009 after CEO and Chairman Ken Lewis came under fire for the bank’s handling of its Merrill Lynch acquisition. Before the recent change, Chad Holliday had served as chairman since 2010. He is not up for re-election this spring and is set to become the chair at oil giant Royal Dutch Shell.
A Bank of America spokesman on Thursday declined to comment on the ISS and Glass Lewis reports. In a proxy filing last month, Bank of America strongly defended its decision to give Moynihan the extra title, saying it was based on a “well-researched” review and months of “thorough deliberation.”
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