The job performance of Brian Moynihan, the Chief Executive Officer of Bank of America Corp (NYSE:BAC) is now being closely examined as shareholders try to deduce whether he deserves to hold the bank's chairman position. Moynihan's position looks further shaky as California State Teachers' Retirement System and California Public Employees' Retirement System- the two largest American public pension funds- are all set to oppose a proposal which will permit the CEO to retain his title of Chairman.
Forbidding any bylaw change
According to Jack Bovender, the lead independent director of the bank, he has received letters from the two pension funds which forbade the bank to make a bylaw change. It said that the roles of Chairman and CEO have ingrained conflicts which made the two posts to be independent and separate. Both of them mentioned that the bank has continued it’s under performance under Moynihan who assumed CEO position in January 2010. It noted that the company had less than ideal engagement with investors and struggled with the annual stress tests by the Federal Reserve.
The letter cements the comments made earlier by Anne Sheehanm who works as California State Teachers' Retirement System's corporate governance director, that she, along with other investors will go on to vote for splitting the two roles. The two funds manage a total of about $476 billion, including approximately $1 billion worth of shares of the Bank of America.
Bank of America, for its part, disagreed with the assessment of its performance. Lawrence Grayson, the spokesman for Bank of America, said that the board holds the belief of having same flexibility of the board leadership as the majority of Standard & Poor 500 companies have, including robust independent oversight at the same time. He mentioned that this will serve stockholders' best interests. Grayson added that only Bank of America has come of financial ruin, made itself healthy with excellent earnings and the accumulated record of liquidity and capital for shareholders' benefit.
Both public pension funds gave the instance of Bank of America's stock price compared to its peers. The central bank ordered the bank to correct its deficiencies and then resubmit the capital spending plan. This must be done by September end.
The CtW Investment Group, advocating for pension funds affiliated by the unions and which collectively holds the management reins for about $200 million, has publicly opposed any bylaw change.