Proxy adviser Institutional Shareholder Services on Friday recommended Bank of America Corp shareholders vote to strip Chief Executive Brian Moynihan of his additional title of chairman, joining a chorus of critics ahead of a September 22 shareholder meeting on the matter. The Charlotte, North Carolina-based bank, which named Moynihan chairman in 2014, has been criticized by shareholders for ignoring their will after their 2009 vote to require an independent chair. Charles Holliday held that post since then until 2014.
ISS in its report backed that view, writing that "The board's unilateral nullification of an independent chairman requirement in the company's bylaws suggests that stronger independent board leadership is necessary." In the sternly worded report, ISS said shareholders "might benefit from the strongest form of independent oversight as the company continues to address operational and performance issues." The bank's share price has hardly risen under Moynihan and it has had problems meeting regulators' stress tests, ISS wrote.
Technically, investors will vote on whether to ratify bylaw changes to allow the bank to have a "lead independent director" when the chairman is not independent, its current board structure. Bank of America has argued the changes give it more flexibility to determine the best leadership structure, and that its governance practices have changed dramatically since the 2009 vote during the financial crisis.