BOSTON (Reuters) - Proxy adviser Institutional Shareholder Services on Friday recommended Bank of America Corp shareholders vote to strip Chief Executive Brian Moynihan of his additional title of chairman, joining a chorus of critics ahead of a Sept. 22 shareholder meeting on the matter.
The Charlotte, North Carolina-based bank, which named Moynihan chairman in 2014, has been criticized by shareholders for ignoring their will after their 2009 vote to require an independent chair. Charles Holliday held that post since then until 2014.
ISS in its report backed that view, writing that “The board’s unilateral nullification of an independent chairman requirement in the company’s bylaws suggests that stronger independent board leadership is necessary.”
In the sternly worded report, ISS said shareholders “might benefit from the strongest form of independent oversight as the company continues to address operational and performance issues.” The bank’s share price has hardly risen under Moynihan and it has had problems meeting regulators’ stress tests, ISS wrote.
Technically, investors will vote on whether to ratify bylaw changes to allow the bank to have a “lead independent director” when the chairman is not independent, its current board structure.
Bank of America has argued the changes give it more flexibility to determine the best leadership structure, and that its governance practices have changed dramatically since the 2009 vote during the financial crisis.
In its proxy materials the bank said if a majority of votes cast at the meeting oppose the bylaw changes, it will move back to having an independent chairman, effectively making the vote a test of whether to let Moynihan keep the chairmanship.
Rival proxy adviser Glass Lewis has also recommended that investors vote against ratifying the bylaw changes. In addition two large pension funds have opposed the bylaw amendments, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System.
Asked about the ISS recommendation, Bank of America spokesman Lawrence Grayson said the bank is only asking “for the same flexibility that 97 percent of the S&P 500 already have in determining its leadership structure.”
Grayson added that “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.”
Reporting by Ross Kerber; Editing by Richard Chang