Bank of America CEO Brian Moynihan on Wednesday reiterated the Charlotte bank’s stance against a controversial North Carolina LGBT law at an annual shareholder meeting that saw stockholders approve executive pay packages and the company’s slate of directors.
The meeting at an uptown hotel was less testy than in recent years when protesters have railed on the bank for its role in the financial crisis and criticized a move to combine the CEO and chairman roles. Instead, Moynihan mostly fielded questions about how the nation’s No. 2 bank by assets can improve its lagging stock price and boost earnings at a time of low interest rates.
In response to a shareholder question, Moynihan added his voice to the list of corporate leaders who have criticized a law passed last month known as House Bill 2 that limits protections for LGBT individuals. Moynihan had previously signed a letter calling for the bill’s repeal, along with other major CEOs, and the bank had issued statements on its position.
“We have been clear and on the record that HB2 should be repealed,” said Moynihan.
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The CEO said he was encouraged by an executive order issued by Gov. Pat McCrory that expands nondiscrimination protections for all state employees, but said Bank of America continues to support the law’s full repeal.
After the meeting, Bank of America vice chairman Anne Finucane said McCrory met with senior executives at the bank in Charlotte soon after the bill was passed last month. The session had been scheduled long before HB2 became an issue and was the type of meeting the bank regularly holds with elected officials to get their perspective on current events, a spokesman said.
Neither Finucane nor Moynihan were present, but Charlotte market president Charles Bowman, technology and operations executive Cathy Bessant and chief administrative officer Andrea Smith attended.
“I think it was candid and respectful,” Finucane said. “I think there was continued disagreement.”
The bank has been “steadfast” in its position, but isn’t contemplating any changes to its operations in the state as a result of the bill, Finucane said. Earlier this month payments company PayPal scrapped a Charlotte expansion in protest of the bill.
“There is something in being here and making our position clear,” she said.
Chairman isssue dominated last year
Wednesday’s meeting at the Hilton Charlotte Center City was more subdued than last spring’s when executives faced questions about the bank’s decision to hand Moynihan the chairman role without an investor vote. At that meeting, director Thomas May, chairman of Bank of America’s corporate governance committee, received only 66 percent of shares voted, enough to keep his position but a clear sign of shareholder discontent.
The bank decided to hold a special meeting on the chairmanship in September and received investor approval for Moynihan to hold both jobs. On Wednesday, shareholders approved all directors with at least 94 percent of shares cast and affirmed compensation for Moynihan and other top executives in a vote of 93 percent of shares cast, according to a preliminary count released by the bank.
Stockholders also ratified the company’s auditor and failed to approve a shareholder proposal that would have required top executives to defer some of their annual compensation to pay for legal violations.
During the question-and-answer session, however, some stockholders took to the microphone to criticize Moynihan for the bank’s sagging stock price and quarterly divided of 5 cents, down from its high of 64 cents in 2008. The stock price, which has been trading around $15 in recent days, remains well below its pre-recession peak of about $56 in 2006. At some other big banks, stock prices are above pre-recession levels.
“Here we are today pretty much stuck in the teens,” one shareholder told Moynihan, asking the CEO to consider increasing the dividend to help bump up the stock price.
In response, Moynihan pointed to the bank’s earnings, which he said have been recovering as the company has resolved legal challenges and other issues stemming from the financial crisis. Like other large U.S. banks, Bank of America needs approval from regulators before raising its dividend. The bank expects to hear from regulators in coming months on its plan to return more capital to shareholders, though it’s unclear if those plans include a higher dividend.
“We have to be able to convince other people that the earnings stream will be solid in the context of a deep, deep recession worse than 2008, and so that’s what we’re working toward,” Moynihan said.
Veteran bank analyst Mike Mayo, who spoke at the meeting, said the board is not doing enough to hold management accountable, including setting dates to meet financial targets. “You have a great franchise, but it’s just not optimized,” Mayo said.
Lead director Jack Bovender defended the board’s stewardship, noting directors have been meeting regularly with shareholders to get their input.
Bank of America will continue to cut expenses as it deals with low interest rates that squeeze profits from lending, even as it makes investments in new technology, Moynihan said during the meeting. Since he became CEO in 2010, the bank’s employment has fallen to near 2008 levels at about 213,000 employees. It has around 15,000 in Charlotte.
“It’s not pleasant, but we will continue to do that,” he said of the cost-cutting.