The tide is turning against Bank of America (BAC) CEO Brian Moynihan.
On Wednesday afternoon, proxy advisory service Glass Lewis recommended that BofA shareholders vote against keeping Moynihan as both the bank’s chairman and its CEO. In the report, Glass Lewis said having Moynihan fill both roles would increase the possibility of a conflict of interest, and go against shareholders’ wishes.
“The Company’s new board leadership policy, combining the roles of CEO and chairman balanced against robust powers of a new lead independent director, is not particularly objectionable nor contrary to common practice at US companies,” wrote Glass Lewis in the report. “Nonetheless, as detailed above, we do not believe that the Company has provided a compelling case for the change in its board leadership bylaw.”
The vote stems from a prior shareholder vote from 2009. Back then, BofA shareholders opted to split the roles of chairman and CEO, which back then were held by Ken Lewis, who left the CEO job later that year and was replaced by Moynihan.
Last October, BofA’s board unilaterally decided to reverse the shareholder vote and recombine the roles, giving both to Moynihan. Shareholders were not pleased. In May, the company said that it would allow a special vote on the matter, for shareholders to officially bless than change. But in the past few weeks, a number of shareholders have said they plan to vote against giving Moynihan both roles. Glass Lewis will give some momentum to the opposition, but it’s rare for shareholders to force companies to split its chairman and CEO roles. And it’s quite common for CEOs at large companies to also be the chairman of the board. BofA’s shares have lagged the market and other banks during Moynihan’s tenure.
Glass Lewis said that its recommendation is not a referendum on Moynihan’s performance but is instead based on the belief that having a joint chairman and CEO is bad corporate governance and the fact that Bank of America ignored a previous shareholder vote that opted against the arrangement.