Bank of America Corp. shareholders should oppose a proposal allowing Chief Executive Officer Brian Moynihan to remain chairman, proxy adviser Glass Lewis & Co. said.
Moynihan, 55, became chairman in October after the second-largest U.S. lender amended shareholder-backed bylaws created in 2009 that require an independent chairman. The bank’s investors are scheduled to vote Sept. 22 on a proposal that would ratify that change.
“We do not believe the company has provided sufficient rationale that shareholders should ratify the board’s decision to repeal a hard-fought governance reform,” Glass Lewis said Wednesday in a report. “Vesting a single person with both executive and board leadership may concentrate too much responsibility in a single person.”
Proxy advisers pushing to split the top jobs at Bank of America have an uphill climb. The lender’s biggest shareholders include institutional investors such as BlackRock Inc. that don’t oppose a combined CEO-chairman so long as the board has a lead independent director with certain powers.
“The board recognizes that some have a fixed view on board leadership structure, but the board believes it’s in the best interest of shareholders to have the same flexibility that nearly all the S&P 500 already has in determining its appropriate leadership structure,” said Larry DiRita, a spokesman for Charlotte, North Carolina-based Bank of America.
The recent departure of former Chief Financial Officer Bruce Thompson, who was replaced by Paul Donofrio last month, increased concerns about the bank’s leadership, according to Glass Lewis. Still, the adviser’s recommendation isn’t meant as a criticism of Moynihan, but is based on the impact of the bylaw change, Glass Lewis said.
Bank of America scheduled the special vote after Jack Bovender, the lead independent director, admitted the firm should’ve consulted investors before changing the bylaws. If a majority of shareholders oppose that decision, the board said it will promptly find an independent chairman.
In recent weeks, shareholders including the two biggest U.S. public pension funds announced they would oppose the proposal. The California Public Employees’ Retirement System and the California State Teachers’ Retirement System manage a combined $476 billion, including a total of about $1 billion of the bank’s shares.
The four members of the lender’s governance committee were re-elected in May with no more than 72 percent of the vote after Glass Lewis and Institutional Shareholder Services lambasted the directors’ actions.
BlackRock is the single biggest holder of Bank of America shares with 5.5 percent, according to data compiled by Bloomberg. Ed Sweeney, a spokesman for the New York-based asset manager, declined to comment on the upcoming vote.
“We generally consider the designation of a lead independent director as an acceptable alternative to an independent chair” if the director can call meetings and set agendas, BlackRock said in a February proxy voting guideline.