The two biggest U.S. public pension funds will oppose a Bank of America Corp. proposal that would allow Chief Executive Officer Brian Moynihan to retain the chairman title.
The California Public Employees’ Retirement System and the California State Teachers’ Retirement System will vote against a proposed bylaw change at a Sept. 22 special meeting, according to a letter Monday to Jack Bovender, the bank’s lead independent director.
“The roles of CEO and chair of the board have inherent conflicts which require the two posts to be separate and independent,” the pension funds wrote.
Calpers and Calstrs said the lender has “continued to underperform” since Moynihan, 55, became CEO in January 2010, noting its struggles with the Federal Reserve’s annual stress tests and “sub-par engagement” with investors. “Given these missteps, we do not believe now is the time to reduce oversight of management by combining the roles of CEO and chair.”
The letter reinforces earlier comments by Anne Sheehan, corporate governance director at Calstrs, who said she and other investors will vote to split the roles. The two pension funds manage $476 billion combined, including a total of about $1 billion of Bank of America shares. The Wall Street Journal reported on the pension funds’ letter earlier Monday.
“The board believes that having the same flexibility on board leadership that 97 percent of the S&P 500 now have, while still providing strong independent oversight, is in the best interest of stockholders,” said Lawrence Grayson, a bank spokesman. “No company has dug out of a deeper hole since the financial crisis, turned back to health with solid earnings, and accumulated record levels of capital and liquidity - also to the benefit of our shareholders.”
CtW Investment Group, which advocates for union-affiliated pension funds that collectively manage more than $200 billion, also said it opposes the bylaw change. Proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. probably will wait until early September to issue their recommendations.
In October, the bank’s directors amended bylaws approved in a 2009 vote that required an independent chairman. In an Aug. 13 regulatory filing announcing the special meeting, the bank’s board praised Moynihan’s leadership and recommended investors ratify the bylaw change. Still, the lender has said it will “promptly implement” a plan to find an independent chairman if a majority oppose the decision that gave Moynihan both jobs.