Bank of America’s annual shareholder meetings in recent years have drawn critics shouting at executives, protesters blocking Charlotte’s streets and even appearances by the Rev. Jesse Jackson.
But when stockholders gather in uptown Wednesday for the Charlotte bank’s latest meeting, it’s unlikely we’ll see that kind of excitement. Lately, the meetings have become less-theatrical affairs as the bank has resolved many of its challenges resulting from the crisis. For the second-straight year, the city has not declared the meeting an “extraordinary event,” a move that gives police expanded authority to search people.
But the tamer meetings don’t mean Bank of America shareholders are concern-free. Here are five issues investors might expect executives to address during the morning meeting at Hilton Charlotte Center City.
▪ Financial performance: Bank of America CEO Brian Moynihan, who took over in 2010, has made strides over the years in slashing the bank’s expenses, including its large legal costs. Those moves have helped Bank of America post last year its highest profit since 2006. But the bank continues to lag its peers on some closely watched profitability measures, and its stock price remains far below pre-recession levels. “How much longer must investors wait?” said analyst Mike Mayo, a frequent Bank of America critic who plans to question executives at the meeting.
▪ Dividend: Moynihan scored a victory for shareholders in 2014 when the Federal Reserve allowed the bank to raise its quarterly common stock dividend to 5 cents. Prior to that, the dividend had been stuck at 1 cent since the crisis. But longtime shareholders, who recall Bank of America having a 64-cent dividend as recently as 2008, are especially looking for it to continue climbing. Since the crisis, some of Bank of America’s big rivals have posted much larger increases in their dividends.
▪ Executive pay: Shareholders will vote Wednesday on an investor’s proposal requiring the bank’s top executives defer some of their annual compensation to pay for legal violations. The proposal calls for “a substantial portion” of compensation be set aside for up to 10 years, after which it would be paid out if the bank hasn’t faced penalties. The bank is recommending shareholders vote against the proposal, which could make it harder to pass, as investors tend to vote in line with company management. The vote comes nearly a week after U.S. regulators proposed new rules to defer payment of at least half of executives’ incentive pay for four years as a way to curb excessive risk-taking at big banks. It’s unclear whether the unveiling of those rules will affect support for the Bank of America proposal, the only shareholder proposal on the bank’s ballot.
▪ ‘Living wills’ snags: Executives could face questions on the bank’s struggles with its “living will” – a plan required by regulators to show how big U.S. banks would be dismantled in a failure without relying on taxpayer bailouts. This month, Bank of America was one of five banks told by the Federal Reserve and the Federal Deposit Insurance Corp. that their wills did not meet standards. The banks have until Oct. 1 to fix the deficiencies or face possible sanctions, such as higher capital requirements and restrictions on growth.
▪ House Bill 2: It would not be that surprising if the state’s controversial LGBT law is mentioned at the bank’s meeting. After all, the bank has said it “remained concerned” about HB2 after an executive order issued by Gov. Pat McCrory left portions of the law intact. Bank of America has also called for HB2 to be repealed. The meeting would be a chance for Moynihan to weigh in personally.