BofA moves to head of investor rebellion

Bank of America has tried to head off a rebellion by shareholders by giving them a say on a change to the board's leadership structure, after it blindsided investors by amending bylaws last year.

Last October the board reversed a 2009 move to divide the role of chairman and chief executive, handing more power to Brian Moynihan, chief executive since 2010. It justified the decision by saying that the earlier division - which had been endorsed by shareholders - was a crisis-era measure that was no longer appropriate, now that the bank had overcome a lot of the damage magnified by its acquisition of Countrywide.

At the same time, the bank appointed Jack Bovender, a former chief of a hospitals group and BofA board member since 2012, as lead independent director. This was a new position with "roles and responsibilities consistent with the duties of an independent board chair", the bank said.

The shake-up angered some shareholders, who felt they had not been consulted enough on a significant change to the bank's leadership structure. Last month Glass Lewis, the influential proxy advisory firm, recommended that shareholders vote against the reappointment of the chair of the bank's governance committee at this year's annual meeting, to be held in Charlotte on Wednesday.

ISS went one step further, saying that the entire governance committee - 4 of 13 board members - should be kicked out.

"Instead of trusting shareholders to approve its change, the board acted alone," ISS wrote. "The old adage - it is easier to ask forgiveness than it is to seek permission - is not a principle of good governance."

BofA said on Monday that shareholders will get the chance to ratify the October 2014 decisions at next year's annual meeting.

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Institutional investors have been calling for companies to loosen controls on board appointments after the near-collapse of the financial system seven years ago showed that banks were doing a poor job of policing risks.

BofA last month tweaked its bylaws to allow long-term investors to nominate directors to the board, in what some pension funds celebrated as a "turning point" for accountability.

This year's annual-meeting season is still in its early stages, though some companies have already faced stiffer-than-usual challenges from shareholders. Last week a proposal to shed more light on Citigroup's lobbying practices drew support from 29 per cent of votes at the Citigroup annual meeting, despite a recommendation by the board to oppose it.

According to John Keenan, a governance analyst at AFSCME, the largest trade union of public employees in the US, the average support rate for similar proposals so far this year is about 28 per cent, marking a fifth year of steady rises since the topic began to gain traction in 2011.

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