Bank of America Corp.’s push to ratify changes that let Chief Executive Officer Brian Moynihan become chairman may draw negative attention to the industry, according to Mike Mayo, an analyst at CLSA Ltd.
The bank is scheduled to hold a Sept. 22 vote to approve bylaw changes made last year that allowed Moynihan to add the chairman title. That move, made in October without consulting shareholders, angered some investors who voted to separate the jobs in 2009.
“The board consolidates power with the Sept. 22 vote at the expense of trading the industry’s reputation,” Mayo said Tuesday in an interview on Bloomberg Television. “It puts a regulatory target on the back of the banking industry.”
Bank of America’s board has praised Moynihan’s leadership and recommended investors support the bylaw change. The two biggest U.S. pensions said Monday they’ll oppose it, adding voices to those who believe the bank is better off with the top jobs held by separate people. The firm has said it will “promptly implement” a plan to find an independent chairman if a majority oppose the change.
“The board believes that having the same flexibility on board leadership that 97 percent of the S&P 500 now have, while still providing strong independent oversight, is in the best interest of stockholders,” Lawrence Grayson, a bank spokesman, said in a statement Monday. “No company has dug out of a deeper hole since the financial crisis, turned back to health with solid earnings, and accumulated record levels of capital and liquidity -– also to the benefit of our shareholders.”
The California Public Employees’ Retirement System and the California State Teachers’ Retirement System will vote against a proposed bylaw change at the special meeting, according to a letter Monday to Jack Bovender, Bank of America’s lead independent director.
“The roles of CEO and chair of the board have inherent conflicts which require the two posts to be separate and independent,” the pension funds wrote.
CtW Investment Group, which advocates for union-affiliated pension funds that collectively manage more than $200 billion, also said it opposes the bylaw change. Proxy advisers Institutional Shareholder Services Inc. and Glass Lewis & Co. probably will wait until early September to issue their recommendations.
“We believe the actions taken by the board of Bank of America make a mockery of the industry’s efforts to improve oversight of the banks since the financial crisis,” Mayo said Tuesday in an interview on CNBC. “These moves by Bank of America taint the entire banking industry.”