Bank of America is trying to consolidate its executive leadership — and on Tuesday, shareholders will finally have a say in the matter.
Last October, the bank handed chief executive Brian Moynihan the additional title of chairman of the board, undoing a 2009 shareholder vote to split the roles.
The move rankled shareholders, stock analysts and corporate governance specialists.
Shareholders will vote Tuesday on the consolidation of power, marking the close of a lengthy battle between those in favour and those who are against.
CSLA banking analyst Mike Mayo has been one of the most vocal participants in the debate, repeatedly
telling shareholders to fight the bank’s move to consolidate.
Business Insider reported last week meanwhile that The California State Teachers’ Retirement System, o
ne of the biggest pension funds in the world, has actively been lobbying shareholders to vote against the proposal.
“We are planning to speak with as many shareholders as will take our calls,” CalSTRS portfolio manager Aeisha Mastagni told Business Insider last week. “Since [Moynihan’s] appointment it has severely underperformed all its major competitors.”
Shareholder advisory firms Glass Lewis and ISS are also advising shareholders vote against the move.
Glass Lewis said that while it is “not particularly objectionable nor contrary to common practices at US companies” to combine the chief executive and chairman post, Bank of America has not provided sufficient rationale for the change.
Christina Rexrode and Joann S. Lublin at The Wall Street Journal have previously reported that Trillium Asset Management has voted against the proposal, and that Korea Investment Corp., South Korea’s sovereign-wealth fund, also plans to vote against it.
Moynihan does have his plaudits however, including billionaire investor Warren Buffett.
The Oracle of Omaha, according to a representative for Berkshire, is “100% in support of Mr. Moynihan and believes he is doing an outstanding job for Bank of America shareholders.”
“When he took over as CEO, he was handed one of the toughest jobs in the history of American banking.”
Barney Frank, the former House Financial Services Chairman, has also spoken in favour of Moynihan, telling Politico’s Morning Money that he didn’t understand the argument against combining the chief executive and chairman posts.
He said: “There is no evidence supporting it … And I have a very good opinion of Brian. … He was very supportive in creating the CFPB [Consumer Financial Protection Bureau], very helpful. … The argument that good governance requires having a separation I just don’t understand.”
Bank of America meanwhile views the push as a step toward aligning itself with marketplace standards, and not as a deviation from sensible governance.
Goldman Sach’s Lloyd Blankfein, JPMorgan’s Jamie Dimon, and Morgan Stanley’s James Gorman all hold both CEO and chairman titles at their respective banks.
Ken Lewis was Bank of America’s CEO and chairman in 2009 when shareholders voted to separate the positions.
Here’s a spokesperson for Bank of America:
The board believes that having the same flexibility on board leadership that 97 per cent of the S&P 500 now have, while still providing strong independent oversight, is in the best interest of stockholders.
No company has dug out deeper since the financial crisis, turned back to health with solid earnings, and has accumulated record levels of capital and liquidity — also to the benefit of our shareholders. The board respectfully recognises that stockholders hold varying views on this matter, which is why the board committed to putting it to a vote.
Business Insider reported on Friday that Bank of America has been lobbying shareholders who own as few as 500 shares in the hopes of winning their votes.