ISS Opposes Bank of America Proposal Allowing Board to Combine Chairman, CEO
September 04 2015 - 8:36PM
Dow Jones News
By Joann S. Lublin
Proxy-advisory firm Institutional Shareholder Services is
recommending that Bank of America Corp. shareholders vote against a
board proposal that would let Chief Executive Brian Moynihan keep
the title of chairman.
The advisory firm said in a note Friday that shareholders would
benefit from stronger independent board oversight as the bank works
through operational and performance issues.
Shareholders are scheduled to vote on the proposal at a special
meeting on Sept. 22.
The recommendation is the latest step in what could be a
showdown between the bank and its shareholders over Mr. Moynihan's
role. ISS rival Glass Lewis also recommended shareholders vote
against the proposal.
The bank's board last year added the title of chairman for Mr.
Moynihan, the CEO since 2010. It was an unusual move because
shareholders had voted in 2009 that the roles should be held by
separate people. The bank, though, has argued that it is no longer
in crisis mode as it was in 2009.
ISS found that argument unconvincing. "While the near-term
viability of [Bank of America] is no longer in question, its
performance and governance continue to raise concerns," the firm
wrote, noting, for example, the bank's missteps on the Federal
Reserve "stress tests."
However, ISS also said the vote wasn't a referendum on Mr.
Moynihan, but on his board members. It called the proposal to
re-separate the roles "a corrective action for board
overreach."
"In the coming months, the board must work to regain
shareholders' trust, " ISS added.
A bank spokesman said Friday that the board wants the same
flexibility that most other big U.S. companies have, to determine
whether they should combine the roles of CEO and chairman. (Only
about half of the S&P 500 companies actually do combine the
roles, though.)
The bank has also pointed out that it created the role of lead
independent director when it made Mr. Moynihan the chairman. That
role, held by Jack Bovender, has "authority, duties and
responsibilities" that "extend beyond industry practice and
expectations," the spokesman said Friday.
"The board continues to adopt corporate-governance enhancements
through engagement with stockholders and in direct response to
shareholder feedback," he added. "The board recognizes and respects
that some have a fixed view on board leadership structure and
others hold differing views, which is why the board committed to
putting it to a vote."
ISS's recommendation was expected. Its views can influence big
shareholders: The firm earlier this year recommended that Bank of
America investors vote against Tom May, chairman of the board's
corporate-governance committee, which was in charge of the decision
to make Mr. Moynihan the chairman.
It also recommended that shareholders vote against the other
three members of the corporate-governance committee. Shareholders
re-elected Mr. May with 67% approval. The average approval rating
for a director at an S&P 500 company is around 97%, according
to ISS. The other three directors on the corporate governance
committee got 72% support.
Mr. May, a longtime ally of Mr. Moynihan's, remains head of the
corporate governance committee.
Write to Joann S. Lublin at joann.lublin@wsj.com and Christina
Rexrode at christina.rexrode@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
September 04, 2015 20:21 ET (00:21 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Bank of America (NYSE:BAC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Bank of America (NYSE:BAC)
Historical Stock Chart
From Sep 2023 to Sep 2024