By Christina Rexrode
Bank of America Corp. shareholders gave Chairman and CEO Brian
Moynihan a vote of confidence Wednesday by re-electing all of the
bank's directors, despite some investor concern over the board's
decision to make him chairman.
In a two-hour meeting in the bank's headquarters city of
Charlotte, N.C., Mr. Moynihan also laid out his defense for keeping
Bank of America together. The board's lead independent director
went through the company's rationale for elevating Mr. Moynihan to
the chairman job last fall.
Both issues have been at the forefront for the bank in recent
weeks. A shareholder proposal asking the bank to examine splitting
itself in two, separating the consumer bank from the investment
bank, had gained some attention but didn't pass at Wednesday's
meeting.
The bank didn't immediately disclose the margins by which the
board members were elected, unusual for a company that has
typically released vote tallies on its directors on the same day as
the meeting. Two influential proxy-advisory firms, Institutional
Shareholder Services and Glass Lewis, had previously recommended
that investors vote against the head of the board's
corporate-governance committee, Tom May, because of the way that
the board promoted Mr. Moynihan to chairman. ISS also recommended
that investors vote against the three other board members who are
on the corporate governance committee.
Mr. May is a longtime board member and considered a close ally
of Mr. Moynihan.
Even before the ISS and Glass Lewis recommendations, some
shareholders had criticized the board for making Mr. Moynihan
chairman without consulting investors ahead of time. The bank
announced Monday that it will let shareholders vote on the board's
decision at some point in the next year, though it hasn't given
details.
At the meeting, Mr. Moynihan reiterated what has become a mantra
in the five years that he has been CEO: that the banking industry,
and Bank of America in particular, are simpler and better
capitalized than they were going into the crisis. It's a point that
has been lost in some discussions, Mr. Moynihan said.
"Are we more risky than we were before the crisis? Have we
gotten bigger? Are we trying to repeal the legislation that changed
the terms under which we operate?" Mr. Moynihan said at the
meeting, which was attended by about 200 people. "Believe me, this
isn't the case."
Some of the controversy around making Mr. Moynihan chairman came
because the board overrode a binding rule that shareholders passed
in 2009 requiring the two jobs be separated.
Jack Bovender, a board member who became the lead independent
director when Mr. Moynihan was elevated to chairman, said he
realized over the past two or three weeks that large investors were
unhappy that the board hadn't sought their input beforehand.
"It became apparent to me through those conversations that they
were right," Mr. Bovender said. "They deserved the right as
shareholders to vote yes or no."
Mr. Moynihan called Mr. Bovender on Saturday to suggest letting
shareholders vote on the matter, Mr. Bovender said during the
meeting. Mr. Moynihan said afterward that he wanted to "clear the
air."
But Mr. Bovender also defended Mr. Moynihan as chairman, and
said that investors' concerns had been more about how Mr. Moynihan
became chairman rather than about Mr. Moynihan's leadership. The
2009 shareholder proposal was passed under a different CEO, and
when the company was "badly broken," Mr. Bovender said. He called
Mr. Moynihan a "high-performing" leader.
"I thought personally that he deserved to have that combination
of chairman and CEO," said Mr. Bovender, who is the former chairman
and CEO of the hospital chain HCA Inc. "I still feel that
today."
About 94% of shareholders approved of Mr. Moynihan's pay
package, in line with last year's approval rating, according to a
preliminary tally from the bank. The bank paid him $13 million for
2014, down from $14 million the year before.
The meeting was largely cordial. Other shareholders praised the
bank for its work on housing for military veterans and low-income
borrowers, and the bank said it would continue to reduce its
lending exposure to coal-mining companies.
Some shareholders asked about the bank's stock price, which is
still far below where it was before the financial crisis, and the
dividend, which remains below that of rivals such as J.P. Morgan
Chase & Co. and Wells Fargo & Co.
"We still have work to do," Mr. Moynihan said. "We fully admit
that."
Write to Christina Rexrode at christina.rexrode@wsj.com
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