By Christina Rexrode
Bank of America Corp. on Monday bowed to shareholder pressure,
saying it will give shareholders the chance to vote on the board's
decision to give the chairmanship to CEO Brian Moynihan.
The bank's announcement comes after some shareholders expressed
unhappiness about the way the board had given the job to Mr.
Moynihan last fall. To do so, board members overrode a 2009
shareholder-passed rule requiring that the two jobs be held by
separate people, and changed the bank's bylaws.
In a letter to shareholders, signed by Mr. Moynihan and the
board's lead independent director, Jack Bovender, the bank said "a
number of stockholders" had told the bank that they "should have
been given the opportunity to vote to ratify the board's bylaw
change."
"We appreciate the candor with which stockholders have shared
their insights, both in support of the decision and in expressing
reservations about the process," Mr. Bovender and Mr. Moynihan
wrote.
The bank will hold its annual meeting Wednesday, but the vote
won't be on the ballot. The bank said it will hold the vote before
next year's annual meeting. The board already changed the bylaw, so
the vote is meant to confirm the board's decision.
The bank has previously described Mr. Moynihan's elevation to
chairman as a "return to normal," noting that the CEOs of most of
the other biggest U.S. banks hold the chairman jobs. The bank has
also noted that the 2009 shareholder rule was passed in a different
era, under a different CEO and when the bank was in the depths of
the financial crisis.
Still, many shareholders who expressed displeasure to the bank
were concerned largely about the process that the board went about
making the change, and not about Mr. Moynihan's leadership,
according to people familiar with the matter. The board made the
change without consulting shareholders ahead of time.
Two proxy advisers, Institutional Shareholder Services and Glass
Lewis, recently recommended that shareholders vote against
re-electing Thomas May, who runs the board's corporate governance
committee, as a way to send a message about the board's process.
ISS also recommended voting against the three other board members
on the corporate governance committee, which was influential in
giving the chairman job to Mr. Moynihan.
"If there is a lesson for BAC shareholders, it is that binding
shareholder votes are meaningless in the face of a board that
chooses not to abide by them. Moreover, this vote on directors is
not a referendum on Moynihan as chairman. -- ISS wrote in a report
late last month. However, ISS also said that its concern was not a
referendum on Mr. Moynihan's leadership.
Some pension-fund investors had pushed last fall for the bank to
put such a proposal on the ballot at this year's annual meeting,
but without success. But after hearing from shareholders as the
annual meeting drew near, Mr. Moynihan decided it was easier to put
the matter to a vote, according to a person familiar with the
situation.
Write to Christina Rexrode at christina.rexrode@wsj.com
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