Two pension funds are engaged in discussions with Bank of America about the bank’s decision in October to hand the chairman title to CEO Brian Moynihan.
The California State Teachers’ Retirement System and New York City Comptroller Scott Stringer sent a letter in October to the Charlotte bank asking for a shareholder vote on the bylaw change that directors made to allow Moynihan to hold both titles.
CalSTRS spokesman Ricardo Duran this week confirmed the discussions with the bank, but declined to comment further. The New York City Comptroller’s office also confirmed the talks.
Bank of America spokesman Larry DiRita declined to comment.
With the bylaw change, Bank of America’s board rolled back a proposal approved by shareholders in 2009 that led the bank to strip former CEO Ken Lewis of the chairman’s title. Since 2009, the second-biggest U.S. bank had maintained an independent chairman — which advocates say provides a better check on management.
“By unilaterally revoking the independent chair bylaw proposed and approved by shareowners, the bank’s board not only weakened its own independence, it also violated a fundamental investor expectation of responsive board conduct,” New York City Comptroller Scott Stringer’s office said last month.
CalSTRS and the New York City Comptroller office aren’t the only institutional investors pressing the bank on the issue, which is likely to be a hot topic at this spring’s annual meeting.
The New Jersey-based Sisters of Charity of St. Elizabeth, a faith-based shareholder group, filed a proposal with the bank last month asking Bank of America to separate the chairman and CEO positions.
Citing recent governments fines and settlements by the bank, the group said it believes management needs greater oversight.
Bank of America shareholders voted to split the CEO and chairman roles at a time when shareholders were frustrated over the bank’s handling of its Merrill Lynch purchase. After the vote, Lewis gave up the chairman role and retired by the end of that year.
Moynihan, CEO since 2010, reclaimed the chairman’s title Oct. 1 from director Chad Holliday, after the board amended the bylaws. The board named Jack Bovender Jr., a Bank of America director since August 2012, as the board’s lead independent director.
Some investors, including Berkshire Hathaway’s Warren Buffett, have said they have no objection to Moynihan holding both titles.