Two of America's biggest public pension funds have come together to oppose an amendment of bylaws at Bank of America Corp. that would allow Brian Moynihan to continue as both chief executive and chairman of the No. 2 U.S. bank by assets.
The California Public Employees' Retirement System (Calpers) and the California State Teachers' Retirement System (Calstrs) sent a letter on Monday to the bank's lead director, Jack Bovender, saying that the roles of CEO and chair of the board have inherent conflicts which require the two posts to be separate.
The funds wrote that since Moynihan was appointed CEO, the bank has underperformed and that it needs stronger, more independent oversight and not less.
"We believe the Board's rationale for making this change is fundamentally flawed and we disagree with many assertions made in the Special Meeting proxy," the funds wrote.
The funds also said the company has never provided a valid business rationale for combining the roles.
Calstrs and Calpers together hold less than 1 percent of the total shares outstanding in Bank of America.
"The board believes that having the same flexibility on board leadership that 97 percent of the S&P 500 now have, while still providing strong independent oversight, is in the best interest of stockholders," said Lawrence Grayson, a spokesman for Bank of America.
The board in October unilaterally changed the company bylaws to allow CEO Brian Moynihan to become chairman.
In May, just two days before the annual shareholder meeting, the company said it would hold a shareholder vote on the change, to be held no later than 2016. That vote will be held at a Sept. 22 special shareholder meeting.
"The board respectfully recognizes that stockholders hold varying views on this matter, which is why the board committed to putting it to a vote," Grayson said.
Bank of America had combined the roles of chairman and chief executive until 2009, when shareholders voted to strip then chief executive Ken Lewis of his chairman title. Investors had objected to his decision to acquire Merrill Lynch at the peak of the financial crisis.
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