Moynihan remains BofA chairman after vote, fends off critics

NEW YORK – Brian Moynihan will keep his dual role as Bank of America Corp.’s chairman and CEO after shareholders voted to ratify governance changes made last year.

Preliminary results showed the resolution passed with about 63 percent of the votes, the company said Tuesday. The Charlotte, N.C.-based lender had called the special meeting after angering some investors by undoing a 2009 shareholder-backed bylaw requiring an independent chairman.

Moynihan, nearing his sixth year leading Bank of America, survived a campaign by pension funds and proxy advisers seeking to force him to surrender his chairman title. Opponents argued that more independent oversight was needed as the firm’s stock lags behind peers. The bank said Moynihan, 55, deserved the dual roles after overhauling its balance sheet and resolving legal cases.

“Anything less than a 70 percent support level is really going to demand questions of this board,” Michael Pryce-Jones, corporate-governance director at CtW Investment Group, said in a Bloomberg TV interview before the meeting. Possible improvements could include bringing in new directors, he said. CtW had said Moynihan should give up the chairman title.

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The lender’s October decision to rewrite governance rules that had been initiated by shareholders galvanized critics who said the firm’s stock price and struggles with annual industry stress tests were proof that more supervision was needed. Pensions including the California Public Employees’ Retirement System and the California State Teachers’ Retirement System said they would vote against management.

Buffett’s support

Voices in support of Moynihan included billionaire Warren Buffett, who said the CEO had done a “first-class job” turning around the lender. Moynihan, who has run the bank since 2010, has cut costs, raised capital levels and resolved more than $70 billion in legal issues, mostly stemming from his predecessor’s acquisition of subprime lender Countrywide Financial Corp.

Bank of America has said that Jack Bovender, its lead independent director, helped ensure its board was an effective check on management. Bovender assists in setting meeting agendas, advises Moynihan on what information directors need and calls gatherings of independent board members.

It’s rare for proposals to split CEO-chairman roles to succeed. Only 3.2 percent of 62 such votes passed this year, according to a Simpson Thacher & Bartlett LLP analysis of companies in the Russell 3000 Index. Plans to separate the jobs usually get about a third of votes, according to the law firm.

Dimon’s vote

At JPMorgan Chase & Co., the biggest U.S. lender by assets, proposals to strip CEO Jamie Dimon of his chairman title failed twice, getting 32 percent of the vote in 2013 and 40 percent in 2012. Citigroup Inc. is the only U.S. lender among the biggest 10 with an independent chairman.

In May, the four members of Bank of America’s corporate- governance committee survived efforts by proxy advisers, including Institutional Shareholder Services, who pushed for their ouster. They were re-elected with at least 66 percent of the vote.

Former CEO Kenneth D. Lewis lost his chairman title during the firm’s 2009 annual meeting when investors were incensed over his handling of the Merrill Lynch & Co. takeover. The binding resolution to split the jobs of CEO and chairman won by a vote of just over 50 percent, and Lewis resigned later that year, paving the way for Moynihan’s promotion.

The bank is resubmitting its capital plan to the Federal Reserve at the end of this month after the regulator said in March that internal controls needed improvement. If the bank fails, the Fed could restrict dividends or share buybacks for the third time during Moynihan’s tenure as CEO.

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