Last week, the nation’s two biggest public pension funds said they would vote against Bank of America’s recombination of its chairman and CEO roles. Now other investors are opening up about their plans, as well.
Charlotte businessman C.D. “Dick” Spangler, for one, says he supports last October’s recombination – which made CEO Brian Moynihan chairman of the Charlotte-based lender and undid a bylaws change investors narrowly approved in 2009.
“Mr. Moynihan has the capabilities to lead in both positions,” Spangler, 83, told the Observer on Tuesday. “I have absolute confidence (in Moynihan).”
Spangler said he has already voted his family’s shares in support of the bank’s fall decision. He declined to disclose their stake.
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According to a 2009 securities filing, Spangler, his wife, their family members and family businesses owned about 32 million shares of Bank of America common stock – less than 1 percent of the bank’s current 10.5 billion outstanding shares. Spangler’s wife, Meredith, resigned from the bank’s board in 2009 after turning 72, the lender’s age limit for directors.
Spangler has a net worth of $2.4 billion, ranking him No. 272 on Forbes magazine’s annual list of the 400 richest Americans. His family owns Charlotte-based National Gypsum, a privately held producer of gypsum board.
On the chairman issue, Spangler said he based his vote, in part, on studies examining the performance of companies with independent and nonindependent chairs.
“There’s no correlation that research has found to prove that one of those methods is better than the other,” he said.
Houston-based Finger Interests, which owns about 900,000 of the bank’s shares, takes a different view. The company believes it was wrong for the lender’s board to reverse the 2009 vote, which received 50.3 percent shareholder support.
Partner Jonathan Finger said the firm has already voted against the move recombining the bank’s CEO and chairman roles. Finger cited Bank of America’s “stress tests” missteps as an example of how the lender “has not demonstrated that less oversight is needed of management.”
Earlier this year, the Federal Reserve said it found “deficiencies” and “weaknesses” in the bank’s capital planning process, marking the lender’s third stress-test gaffe in five years.
Finger noted that Moynihan, CEO since 2010, was a senior executive when the bank decided to buy mortgage lender Countrywide Financial Corp. in 2008 and investment bank Merrill Lynch in 2009.
“One thing that people forget ... Brian was a top lieutenant under (former CEO) Ken Lewis and was certainly involved in the acquisitions of Merrill Lynch and Countrywide,” Finger added.
Bank of America on Tuesday reiterated its position on the issue, pointing out that most companies in the S&P 500 are not required by their bylaws to have a separate chairman.
“The board is asking for the same flexibility that 97 percent of the S&P 500 already have in determining its leadership structure,” Bank of America spokesman Lawrence Grayson said. He said the board “recognizes and respects” there are differing views on the issue, which is why the board is holding the Sept. 22 vote.
In a setback for Bank of America, two prominent firms that advise investors on how to vote issued recommendations last week that they reject recombining the roles.
The North Carolina Retirement Systems also voted this spring against re-electing the four directors who sit on the bank’s corporate governance committee. All were re-elected. Last week, a spokesman for the N.C. treasurer’s office, which manages the pension fund, said the office was still studying the matter.
Bank of America, meanwhile, is pushing to win shareholder support for the recombination. In a securities filing last month, the bank disclosed that it has agreed to pay $150,000 plus expenses to two proxy solicitation firms. The roles of such companies include helping companies secure shareholder votes. The bank spent $19,500 on such costs for its shareholder meeting this past spring.
In an interview with CNBC on Tuesday, famed investor Warren Buffett expressed support for Moynihan, saying Moynihan turned around a company “that was just a terrible mess.” Buffett’s firm, Berkshire Hathaway, made a $5 billion investment in the bank in 2011, offering the ailing lender a lifeline – a decision Buffett said he reached while in the bathtub.
On the chairman-CEO issue, Buffett said Tuesday: “If I could vote, I would vote as management suggests, which is to have Brian take on the CEO and chairman job.”
In a separate CNBC interview Tuesday, longtime Bank of America analyst Dick Bove criticized the bank’s board over its handling of the recombination.
The board, he said, “should be eliminated for putting the shareholder in this position."
Under Moynihan, the bank’s share price has remained well below pre-financial crisis levels, closing Tuesday at $16.16.
Does that frustrate C.D. Spangler?
“It would take a lot more than that to get me frustrated,” he said.