Bank of America announced Monday that it will allow shareholders to vote on its decision last year to give CEO Brian Moynihan the chairman title, bowing to pressure from investors who want a say in the matter.
Shareholders will be allowed to ratify the bank’s decision to re-combine its chairman and CEO roles, the lender says in a letter to investors. Monday’s move comes after the bank amended its bylaws in October to re-combine the positions without giving shareholders a vote on the issue, a decision that has upset some of the Charlotte bank’s stockholders.
“A number of stockholders have expressed the view that stockholders should have been given the opportunity to vote to ratify the board’s bylaw change,” the bank says in its letter. The decision to grant the vote comes after Bank of America reached out to many stockholders to “learn of their views” on the issue, the letter says.
It is unclear exactly when shareholders will get to take the vote, but it is not expected to occur at this year’s annual meeting of stockholders set for Wednesday. The bank said the vote is expected to take place no later than its 2016 meeting for stockholders.
In October, the bank named Moynihan chairman of the bank, making him the lender’s first chief executive to hold the post since Ken Lewis was stripped of the title about five years ago.
That move rolled back a rare victory for shareholders who voted in 2009 to split the CEO and chairman roles in the fallout from the bank’s handling of its Merrill Lynch purchase. Stockholders supported separating the roles as billions in losses piled up at Merrill, which the bank had acquired under Lewis’s watch.
In its letter Monday, Bank of America does not spell out what action the bank might take if shareholders vote against ratifying the bylaw change.
The bank’s decision to allow the vote comes after two proxy-advisory services urged the lender’s shareholders to vote against some of its directors over the re-combination of the chairman and CEO roles. The proxy-advisory firms said the stockholders should show their disapproval by voting against the directors.
“I am hopeful that the board woke up and realized that the wishes of their shareholders do indeed matter,” independent bank analyst Nancy Bush said Monday. Bank of America “desperately needs to change its image as being accident-prone and slow to react,” she said. “Perhaps this will be a good start.”
Some corporate-governance experts argue for splitting the roles, saying it provides an independent check on management.
Bank of America has defended the re-combination of the roles. In its proxy filing in March, the bank said the move was based on a “well-researched” review and months of “thorough deliberation.”