Bank of America provides shareholders an opportunity to vote on the change made by its board of directors on the company’s bylaws that allow Brian Moynihan to serve as Chairman and CEO.
According to the bank, shareholders could approve or reject the bylaws change no later than 2016.
Shareholders criticized Bank of America
In October, the board of directors of Bank of America reversed a 2009 rule approved by shareholders that required the role of the CEO and Chairman to be separated. Some of the shareholders of bank including the California State Teachers’ Retirement System (CalSTRS) were not pleased by the decision of the board to make Moynihan both Chairman and CEO.
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At the time, CalSTRS corporate governance director, Anne Sheehan said Bank of America board “flaunted the will of the shareholders.”
The Institutional Shareholder Services (ISS) and Glass Lewis & Co urged shareholders to vote against the re-election of some of the board members of Bank of America. The two influential shareholder advisory firms also criticized the banks’ process and decision to recombine the roles of the CEO and Chairman.
“Shareholders must now consider whether directors who nullify shareholder votes and avoid shareholder input can represent shareholder interests in the boardroom and warrant their support going forward,” according to ISS.
In response to the criticisms, Moynihan and Jack Bovender, the lead independent director of Bank of America, sent a letter to shareholders informing them that they will have a chance to vote on the matter.
In their letter, Moynihan and Bovender noted that a number of shareholders expressed that Bank of America should have given them the” opportunity to vote to ratify the board’s bylaws change.”
“We appreciate the candor with which stockholders have shared their insights, both in support of the decision and in expressing reservations about the process,” wrote Moynihan and Bovender.
Buffett supports Bank of America
Warrant Buffett, the Chairman and CEO of Berkshire Hathaway, and one of the largest shareholders of Bank of America supported the bank’s decision to re-combine the Chairman and CEO roles.
Buffett said, “I support the Board’s decision 100%. Brian Moynihan has done a superb job as CEO of Bank of America, and he will make an excellent Chairman as well.”
Bill Nygren, a partner at Harris Associates and portfolio manager of Oakmark Funds, shared Buffett’s view that Moynihan did a great job as CEO. He said We have no problem with him [Moynihan] holding both positions.”