The influential proxy advisory firm Glass Lewis & Co. says Bank of America shareholders should vote against a proposal that allows Chief Executive Officer Brian Moynihan to remain chairman.
Moynihan, 55, became chairman in October after the second-largest U.S. lender amended shareholder-backed bylaws created in 2009 that require an independent chairman. The bank’s investors are scheduled to vote Sept. 22 in Charlotte on a proposal that would ratify that change.
“We do not believe the company has provided sufficient rationale that shareholders should ratify the board’s decision to repeal a hard-fought governance reform,” Glass Lewis said Wednesday in a report.
Proxy advisers pushing to split the top jobs at Bank of America have an uphill climb. The bank’s biggest holders include huge institutional investors including BlackRock Inc. that don’t oppose a combined CEO-chairman so long as the board has a lead independent director with certain powers.
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Bank of America spokesman Lawrence Grayson said the board “recognizes that some have a fixed view on board leadership structure, but the board believes that it is in the best interest of shareholders to have the same flexibility that nearly all the S&P 500 already has in determining its appropriate leadership structure as circumstances warrant.”
Earlier this week, the nation’s two biggest public pension funds said they would vote against the proposal. In a letter sent to the Charlotte-based bank on Monday, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System said the roles of CEO and chairman “have inherent conflicts which require the two posts to be separate and independent.”
Since Moynihan became CEO, “the company has continued to underperform,” the letter says, pointing to Bank of America’s share price not rising as much as its big-bank peers’ over the five-year period. The letter also cites missteps such as a $4 billion miscalculation of capital ratios that the bank disclosed in 2014.
Bank of America has previously pointed out that the 2009 vote to split the chairman and CEO roles was “very close,” with 50.3 percent in favor. The bank has also noted that the vote took place during a different era, when the bank had just purchased Countrywide Financial Corp. and Merrill Lynch, deals that shareholders questioned.
Combined, the California pension funds own 63.6 million Bank of America shares worth about $1 billion, less than 1 percent of the bank’s total outstanding shares.
Last week, CtW Investment Group, a Washington, D.C.-based advocate for pension funds affiliated with labor unions, issued a letter urging shareholders to vote against the move to combine the roles. In the letter, CtW said Bank of America remains a “deeply challenged banking franchise” and that the lender took “a big step backwards in corporate governance” by getting rid of its independent chairman.
Staff Writer Deon Roberts contributed.