After replacement of the bank’s chief financial officer and wealth management chief in management shake-up, shareholders of Bank of America Corporation BAC are now defiant to have an independent chairman at the bank. The chairman title is currently held by the Chief Executive Officer (“CEO”) Brian Moynihan.
The matter hogged more attention after CtW Investment Group, which is affiliated to a federation of unions with over $200 billion in assets and represents around 0.2% of Bank of America’s votes, posted a letter on its website on Friday. The firm was among the investors involved in shareholder amendment in 2009, which directed the appointment of an independent chairman.
The letter posted at present urged shareholders to vote against the bank’s proposed bylaw change at the Sep 22 voting, which was announced by the bank due to pressure from shareholders at its annual meeting back in May.
The roles of CEO and chairman were recombined last October by Bank of America after the then chairman Chad Holliday stepped down from his position. The bank considered the issues related to pre-Lehman acquisitions of Countrywide and Merrill Lynch a problem of the past and thus, deemed separation of the role of the chairman as no longer necessary.
However, shareholders of the bank were of a different opinion. Many major investors displayed their disapproval and compelled the bank to keep the roles segregated as before. Fear of shareholders’ wrath led the bank to schedule a September vote, in which shareholders are expected to coerce Moynihan to renounce his chairman title as recommended by CtW.
The letter stated, “we believe eliminating the independent chairman’s role raises unnecessary risks for shareholders without demonstrable benefits.” The letter further said, “Bank of America’s decision to unilaterally amend the bylaw, apparently after a “thorough and thoughtful process,” displays a shocking lack of awareness.
Another major investor, Norges Bank Investment Management, which is Europe's largest pension fund and among the top 20 shareholders holding around 0.8% of Bank of America’s votes, is also in favor of separation of the roles and is expected to vote for the same in the upcoming meeting.
Among the major U.S. banks such as JPMorgan Chase & Co. JPM, Wells Fargo & Company WFC and Citigroup Inc. C, only Citigroup has a separate chairman and CEO.
Currently, Bank of America holds a Zacks Rank #2 (Buy).
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