Bank of America is facing a critical vote next week — and it looks like the board is pulling out all the stops to avoid an embarrassing defeat.
On Tuesday, shareholders will be asked to vote on whether or not CEO and chairman Brian Moynihan should keep his chairman title.
Eager to win the “yes” vote, the bank’s board has started lobbying investors, ranging from top 20 shareholders to small-time individual shareholders.
Joel West, a California business teacher and owner of 512 BAC shares, told Business Insider that he received a phone call this week from a proxy solicitor working on behalf of the bank.
As a smalltime shareholder, he hadn’t thought much about the proxy statement he received in the mail.
Then, he received a phone call from a number associated with Georgeson, one of BAML’s proxy solicitors. The person on the phone asked him if he would like to vote, but when he pressed her for details on the details of the vote, he could not get a clear response.
“At some point they said, ‘Management recommends that you vote yes,'” West said.
The proxy solicitor then asked him if he would like to vote in favour of management’s position.
He said the solicitors did not mention Moynihan’s name, nor the words “chairman” or “CEO.” They only referred to the “board leadership structure.”
Business Insider called Georgeson for comment. Sharon Harding, who identified herself as a representative on behalf of Bank of America, confirmed that the proxy solicitor has reached out to individual shareholders on behalf of Bank of America recommending they vote in favour of management’s position.
She said the practice is not unusual for the firm.
Bank of America declined to comment on the individual investor calls.
CLSA analyst Mike Mayo is a fierce strong proponent of the “no” vote.
Commenting on the individual shareholder calls, Mayo said, “Desperate times call for desperate measures — but it might work. A $US2 trillion bank has a lot of influence.”
“The process by the board, in aggregate, seems out of step with much of the industry,” he said.
Mayo said the whole debacle will look bad for the board, no matter which way the vote ends up going. Even if the vote passes he thinks there will be enough of a “no” vote to send the message that it’s time for the board to “upgrade.”
Stay tuned for more as Tuesday’s vote draws nearer.
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