Bank of America shareholders will vote on whether or not to strip CEO Brian Moynihan of his title as chairman of the board.
NEW YORK — Bank of America CEO Brian Moynihan will face one of the toughest tests of his career Tuesday when shareholders decide whether to strip him of his role as chairman of the board.
If Moynihan prevails, his troubles with shareholders may be just getting started.
Indeed, some shareholders are considering plans to agitate for other changes on the bank’s board if the vote goes in favor of Moynihan and he is retained as chairman.
“Anything but a resounding victory (for Moynihan as chairman) leaves this board in limbo,” said Michael Pryce-Jones of CtW Investment Group, which represents funds that invest on behalf of labor unions. Future board targets could include the board’s lead independent director, Jack Bovender, and members of the board’s nominating committee, Pryce-Jones told USA TODAY.
“This is a hornet’s nest that Bank of America has opened,” the CtW official said.
"This is a hornets nest that Bank of America has opened"
BofA shareholder
Last year, the bank’s board agreed to elevate Moynihan to the role of chairman — the most powerful job at any company — without first consulting shareholders. That led to a wave of criticism because it went directly against a 2009 vote by shareholders to separate the chairman and CEO roles under then-CEO Ken Lewis.
Moynihan succeeded Lewis as CEO in 2010.
In an effort to quell criticism, BofA agreed to put the issue to another vote — the results of which will be announced at a special shareholders meeting in Charlotte on Tuesday.
BofA has argued that Moynihan was the best man for the job, a position that was backed by renowned investor Warren Buffett. The Berkshire Hathaway chairman and CEO told CNBC that Moynihan has done such a good job cleaning up BofA since the financial crisis that he would cast a “for” vote on the proposal if he could.
Buffett owns preferred shares in BofA, which do not come with voting powers.
Not everyone agree, however, and some people are saying that a win for Moynihan Tuesday may only reinvigorate efforts by dissenting shareholder to make changes to the board.
“Even if the board prevails but there is a large negative vote of 30% or 40%, I think that could portend changes for next year,” said Jonathan Finger of Finger Interests, which owns just under 1 million BofA shares.
“I think the question is going to be whether the board, as it is currently composed, can continue,” said Jonas Kron, director of shareholder advocacy at Trillium Asset Management, which owns 400,000 BofA shares. “Do we need to bring new folks onto the board who can exercise more vigorous, independent oversight?” Kron asked.
Other shareholders planning to vote against Moynihan include the $ 293 billion California Public Employees Retirement System pension funds, the $ 184 billion California State Teachers’ Retirement System, the Ontario Teachers’ Pension Plan, the Texas Teacher Retirement System and SEIU Master Trust, which manages $ 2 billion for the Service Employees International Union.
Shareholder advisory firms ISS and Glass Lewis have also advised shareholders to vote against the proposal and their recommendations have been known to sway as much as 30% of shareholder votes.
But it’s unclear how some of BofA largest investors — namely, the large mutual fund companies — plan to vote. “We do not share how we are voting, or even telegraph it, outside of the formal voting process,” said Edward Giltenan of T. Rowe Price, which is BofA’s seventh-largest shareholder, with 138 million shares.
Follow USA TODAY business reporter Kaja Whitehouse on Twitter @kajawhitehouse
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