A representative of a proxy advisory service that is urging Bank of America stockholders to oppose one director’s re-election said a big blunder must occur for it to recommend voting against the board members of a company.
Glass, Lewis & Co. is one of two prominent proxy advisers that are instructing Bank of America shareholders to vote against certain directors in response to the bank’s decision last fall to discard a 2009 bylaw change that split the chairman and CEO roles. Their recommendations came in the past week ahead of the Charlotte bank’s May 6 annual meeting.
In an interview with the Observer on Friday, Robert McCormick, chief policy officer for Glass, Lewis & Co., said the adviser sometimes recommends shareholders vote against company directors if they make certain missteps. Those could include poor attendance at board meetings or failing to act in the best interest of shareholders.
“It’s a relatively high bar for us to take that step to recommend a voting against a director,” he said.
But McCormick also said it’s unlikely a majority of shareholders will vote against re-electing Bank of America directors, despite the proxy advisers’ recommendations.
Glass, Lewis is advising shareholders to oppose the re-election of Thomas May, chairman of Bank of America’s corporate governance committee, at the bank’s annual investors meeting in SouthPark.
That recommendation is based on the lender’s failure to give shareholders a say before it re-combined the chairman and CEO roles in October, McCormick said. Shareholders had approved separating the roles in 2009 amid frustration over the bank’s troubled Merrill Lynch purchase. By rolling back the bylaw change, the bank frustrated some analysts and shareholders who believe an independent chairman provides for better corporate governance.
Proxy adviser Institutional Shareholder Services is recommending voting against all four members of the board’s corporate governance, including May. ISS declined to comment.
Following the bank’s decision to give CEO Brian Moynihan the chairman title, some large shareholders initially sought a shareholder vote on the issue but later backed off those calls. The California Public Employees’ Retirement System, among the investors that pushed back on making Moynihan chairman, is now saying they will vote to re-elect all the bank’s directors.
Bank of America spokesman Lawrence Grayson declined to comment. In its proxy filing last month, the bank defended its decision to make Moynihan chairman, saying it was based on months of deliberation.
Independent bank analyst Nancy Bush said she does not expect the majority of Bank of America shareholders to vote against the directors.
But she described the proxy advisers’ recommendations as “yet another indication that the Bank of America board remains somewhat isolated from the bank’s shareholders and from public opinion.”
Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said May is the most vulnerable because of his chairman position.
“Usually, the chair in these situations gets the greatest vote withheld when you have these kinds of recommendations,” he said. Elson said he expects a “decent number” of shareholders to support the proxy advisers’ suggestions.
Bank of America directors have faced calls for their ouster in the past.
In 2009, proxy advisory firms and activists urged shareholders to vote against certain Bank of America directors in the aftermath of the Merrill Lynch acquisition. All of the directors were re-elected, but three received less than 75 percent of the vote. Later that year, the board went through a major shake-up, partly under pressure from federal regulators.
At this year’s annual meeting, 13 directors, including Moynihan, will be up for election. Board members need a majority of votes cast to be elected.
In recent years, the board has gone through a major transformation, including the departure this spring of Chad Holliday, the past chairman.
Of the 12 non-management directors, seven have joined the board since Moynihan became CEO in 2010. Two others, Chad Gifford and May, are considered Moynihan allies. They became directors through Bank of America’s 2004 acquisition of FleetBoston Financial, where Moynihan was an executive.
In addition to May, who is CEO of Eversource Energy, ISS is also recommending shareholders vote against Sharon Allen, a retired Deloitte chairman; Frank Bramble, a retired MBNA credit card executive; and Lionel Nowell, a former PepsiCo treasurer.
Jonathan Finger, partner with Houston-based Finger Interests, which owns about 900,000 Bank of America shares, said his company has already cast its votes – against all of the lender’s directors. His company backed the 2009 vote to split the roles and even sent letters to other shareholders at the time to get their support for the proposal.
Recombining the roles, he said, is “a disregard for shareholder wishes.” Staff writer Rick Rothacker contributed.