Glass Lewis & Co. came out Wednesday against ratifying the Bank of America Corp. corporate bylaw amendment allowing the financial giant's board of directors discretion to determine its leadership structure on whether or not to have an independent chairman.
The proxy-voting advisory firm recommends its institutional investor clients vote against the proposal.
“We believe that as a matter of good corporate governance, the board should always submit for shareholder vote any amendments that materially diminish the effect of a proposal previously approved, and particularly submitted, by shareholders,” according to a Glass Lewis report on its Bank of America analysis. “This is particularly pertinent with regard to independent board leadership, which has been a contentious topic at many companies, including other major U.S. financial institutions, and is a perennial concern for many investors.”
The board named CEO Brian T. Moynihan chairman in 2014, unilaterally amending a corporate bylaw requiring an independent chairman that was approved by shareholders in 2009.
“While we have concerns about the proposal itself, we do not believe the board of directors should interpret a vote against this proposal as a signal of disapproval of the leadership of either Mr. Moynihan” or Jack O. Bovender Jr., lead independent director, the Glass Lewis report said. “We are not opining on the performance or qualifications of the two men, but rather on the continued effect of the bylaw, as its effects will persist even after Mr. Moynihan and Mr. Bovender depart from the company.”
“Glass Lewis believes that the appointment of a chairman of the board who is independent of management is nearly always preferable to having a single individual lead both the board and the executive team. We view an independent chairman as better able to oversee the executives of the company and set a pro-shareholder agenda.”
Lawrence Grayson, Bank of America spokesman, said in an e-mail, “The board recognizes that some have a fixed view on board leadership structure, but the board believes that it is in the best interest of shareholders to have the same flexibility that nearly all the S&P 500 already has in determining its appropriate leadership structure as circumstances warrant.”
The Bank of America special meeting is Sept. 22.