Bank of America CEO Moynihan retains chairman title after vote

The Bank of America building is shown in Los Angeles, California October 29, 2014.

Bank of America Corp shareholders voted to allow Chief Executive Brian Moynihan to remain chairman, handing a victory to a CEO that has been slowly turning his bank around since the financial crisis. Of the ballots cast, 63 percent were in favor of Moynihan keeping the title, a bank official said on a webcast of a special meeting held to vote on the matter.
The bank's shares fell 1.27 percent to $15.50 in morning trading on Tuesday.
The vote followed a months-long campaign by investors including the California Public Employees' Retirement System, the largest public pension system in America, to give Bank of America an independent chairman.
The investors argued that Moynihan needed more independent oversight from the board.
Ralph Cole, Vice President of Research for Ferguson Wellman Capital Management, which has about 1.3 million Bank of America shares and voted to split Moynihan’s role, said the outcome amounts to a show of confidence for Moynihan.
But, Cole added, "it also puts him on notice, and that can’t be a bad thing if you're a shareholder, that people expect good governance."
Similar votes at JPMorgan Chase & Co's annual meetings in 2013 and 2012 failed to strip CEO Jamie Dimon of his chairman title, just like votes at Wells Fargo & Co from 2005 through 2007 fell short of stripping CEO Richard Kovacevich of his additional role as chairman.
Moynihan's vote count was roughly in line with Dimon's: In 2012, about 60 percent of investors voted to keep Dimon as chairman and CEO, and in 2013, 68 percent.
Typically, chief executives lose chairman titles as part of broader campaigns by activist investors to change a company. In 2013 for example, oil and gas company Hess Corp relieved CEO John Hess of his chairman duties to appease activist hedge fund Elliott Management, which was campaigning to break up the company.
Though Bank of America won this vote, overall independent chairmen are becoming more common, according to executive search firm Spencer Stuart. (reut.rs/1OOfhxK)
Twenty-eight percent of the boards of companies in the Standard & Poor's 500 index had independent chairmen in 2014, up from nine percent in 2004, a report from the recruiter says.
Investors point to several reasons for their displeasure with Moynihan's performance. The bank's shares have lagged major rivals, including Citigroup Inc's and JPMorgan Chase & Co's, for the nearly six years that Moynihan has been chief executive.
Profits have been much lower than those rivals, too, in large part because of Bank of America paid out more than $70 billion to settle crisis-linked claims and suits. Many of these difficulties stem from decisions made by Moynihan's predecessor, Ken Lewis.
His ill-timed acquisitions, including buying subprime mortgage lender Countrywide Financial Corp at the height of the housing crisis, forced the bank to seek at least two government rescues. Shareholders decided in 2009 that he needed better oversight, and voted to separate his duties.