Tuesday is a big day for Bank of America CEO Brian Moynihan, who is expected to learn whether shareholders will allow him to keep his title as chairman of the Charlotte-based lender.
It’s unclear whether shareholders gathering at the special meeting in Charlotte will approve the change the bank made last fall eliminating a requirement for an independent chairman. The bank named Moynihan chairman, which overrode a binding 2009 shareholder resolution to split the chairman and CEO roles.
What is clear is that the debate over whether the bank should have one person or two in the positions has captured the attention of some big Wall Street names, who in recent weeks have taken different sides on the issue.
Their views could influence shareholders. In 2009, just 50.3 percent of votes were cast in support of separating the CEO and chairman positions.
In 2011, Buffett’s firm, Berkshire Hathaway, made a $5 billion investment in Bank of America, in a deal that includes the right for Berkshire to buy 700 million common shares at $7.14 apiece. Berkshire has yet to exercise those rights and, therefore, can’t participate in Tuesday’s vote.
But earlier this month, in an interview with CNBC, Buffett said that if he could vote, he’d let Moynihan retain the chairman title. Moynihan has turned around a company “that was just a terrible mess,” Buffett said.
In an interview with the Observer last week, the former Massachusetts congressman and co-author of the 2010 Dodd-Frank Act said he told the bank a few weeks ago that he doesn’t believe companies should always put separate people in chairman and CEO roles. The bank then asked Frank if he would share that view with the media.
Frank said he has a “very high opinion” of Moynihan and has “been generally impressed with the way he has handled his legacy problems.”
A variety of pension funds from across the country have been among the most vocal critics of recombining the positions at Bank of America.
Those include the California Public Employees’ Retirement System and the California State Teachers’ Retirement System. The nation’s two biggest public pension funds cite “failures by management,” including a $4 billion capital ratios miscalculation Bank of America disclosed last year.
The former CEO of Wells Fargo told Reuters last week that Bank of America shareholders are wrong to try and strip Moynihan of the chairmanship.
Kovacevich, who for years held the CEO and chairman positions simultaneously at Wells Fargo, said investors often do not know what is best for a company, because they have worse information than managers, according to Reuters. Further, how Bank of America investors voted in 2009 “is totally irrelevant” today, he said.
In a story on Yahoo Finance, the former Federal Deposit Insurance Corp. chair said “too much is made” of splitting CEO and chairman roles. But Bair did not comment specifically on Bank of America’s upcoming vote.
Two firms shareholders look to for recommendations on how to vote have advised investors to oppose the recombination.
One of those firms, Glass Lewis & Co., said having one person in both roles may concentrate too much responsibility in a single person and inhibit independent board oversight of a company’s executives.
The other, Institutional Shareholder Services, said the bank’s performance and governance continue to raise concerns: “BAC’s share price is essentially flat during Moynihan’s tenure as CEO and it remains far below its pre-crisis levels, leaving many long-time investors underwater.”