Next month, Bank of America will hold a special meeting to let shareholders vote on its surprise move last year to make CEO Brian Moynihan chairman.
Could the choice of a special meeting, instead of a regular shareholders meeting, influence the outcome? Some experts I spoke with say yes.
Last week, the Charlotte-based bank announced Sept. 22 as the date for the meeting. Shareholders are being asked to approve the board’s October bylaws change that eliminated a requirement for an independent chairman. The bank decided to allow the vote after shareholder backlash about not being given a say in the change – which overrode a 2009 shareholder vote separating the chairman and CEO roles.
Experts I spoke with said important factors can come into play at special meetings, potentially affecting how shareholders vote.
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Ken Thomas, a Miami-based bank consultant, said a special meeting magnifies the focus on Bank of America’s proposal, because it will be the only item up for a vote. At regular meetings of large public companies, shareholders tend to vote on multiple proposals.
“Especially after what the board did last fall with the bylaw change, this is a more investor-friendly approach, which BOA sorely needs,” Thomas said.
When companies hold special shareholder meetings, voting results tend to be closer, independent bank analyst Nancy Bush said. During a regular meeting, shareholders generally go along with the voting recommendations of company management, she said.
If history serves as any indicator, the results might be close. Of the Bank of America shareholders who voted on the 2009 proposal, 50.3 percent supported the CEO and chairman jobs being held by different people.
The recommendations by proxy-advisory firms, which suggest how shareholders should vote on proposals, could also affect the outcome. Those recommendations have yet to be released.
“I’m predicting passage,” Bush said. “But they will have been taken to the woodshed by the shareholders, the large shareholders particularly, and they will have learned an important lesson.”
Thomas says it is possible that some large investors might vote for separating the roles to express displeasure with the October decision.
Bank of America’s last special meeting was in February 2010, Moynihan’s first year as CEO. At that meeting, shareholders approved increasing the number of common shares the bank was authorized to issue as the lender sought to pay back $45 billion in government bailout money.
You can be sure of one thing: Corporate America will be watching what happens next month.
Opponents of combined chairman and CEO roles argue it weakens checks and balances on a company’s management. Others say a lead independent director, which Bank of America established when it made Moynihan chairman, provides a counterbalance and helps maintain independent board leadership.
According to executive search and consulting firm Spencer Stuart, the number of boards splitting the CEO and chairman roles is growing. Last year, 47 percent of S&P 500 boards split the role, up from 37 percent in 2009.
If a majority of Bank of America shareholders vote against one person having both titles, it will send a “big message” to other companies, Bush said: “We’re no longer in favor of combined chairman/CEO slots.”