North Carolina Retirement Systems said Monday it is voting against Bank of America’s decision last year to recombine its chairman and CEO roles, becoming the Charlotte-based lender’s latest large shareholder to oppose the move.
The state pension fund’s announcement comes a week before the lender is scheduled to hold a special shareholders meeting in Charlotte on the issue.
At the Sept. 22 gathering, shareholders will vote on whether to ratify the bank’s decision last October to change its bylaws and eliminate a requirement for an independent chairman. The bank did not consult with shareholders before making that bylaws change, a decision that upset some large investors, causing the lender to schedule the special meeting.
“It is our firm belief that an independent board is the most effective means of protecting shareholders’ interests and ensuring adequate board oversight of management,” Melissa Waller, chair of the pension fund’s corporate governance committee, said in a statement.
As of Friday, the pension fund owned $152.8 million in Bank of America shares, said Brad Young, spokesman for the N.C. treasurer’s office, which manages the pension fund. The figure represents less than 1 percent of the total value of the bank's $167.9 billion in outstanding shares.
The announcement by the N.C. pension fund follows vows other big Bank of America shareholders have made to vote against recombining the roles.
In a letter to the bank last month, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System – the nation's two biggest public pension funds – said they oppose the recombination. The two funds argue Bank of America needs “stronger, more independent oversight, not less.” The letter cites “missteps” that have occurred under Moynihan, including a $4 billion miscalculation of capital ratios the bank disclosed last year.
Supporters of splitting the roles also say having two people hold the titles provides an independent check on management.
In getting rid of the requirement for an independent chairman, the bank undid a bylaws change it made in 2009 after shareholders voted at the time to split the roles.
As it has sought shareholder support for the recombination, Bank of America has noted that the 2009 vote was close, with 50.3 percent of the votes in favor. The bank has also noted that the vote took place during a different era, after the lender had recently purchased Countrywide Financial Corp. and Merrill Lynch, deals that shareholders questioned.
Bank of America has also said its board believes it is in the best interest of shareholders for the lender to have the flexibility to be able to appoint an independent or non-independent chairman.
The bank has garnered support from names well known on Wall Street as next week’s meeting approaches.
Last week, in an interview with CNBC, famed investor Warren Buffett said that if he could vote, he’d vote for Moynihan holding both jobs. Buffett’s firm, Berkshire Hathaway, made a $5 billion investment in the bank in 2011, in a deal that includes the right for Berkshire to buy 700 million common shares at $7.14 apiece. Berkshire has not exercised those rights yet.
Barney Frank, the retired Democratic congressman who co-authored the Dodd-Frank financial reform act, has also lent his support to the bank’s push to recombine the roles. Frank told various media outlets in interviews over the weekend that he is not convinced by arguments that splitting the roles at companies creates better corporate governance. Frank represented the Boston area, where Moynihan lives and Bank of America has operations.
Although it remains unclear how the vote will go, some of the lender’s largest shareholders might support the recombination. Those institutions, such as BlackRock and Vanguard Group, typically side with management in keeping the top roles combined, according to their public proxy guidelines.
Bloomberg News contributed.