Glass Lewis Opposes BofA Board Proposal

​Proxy advisory firm Glass Lewis & Co. is recommending shareholders vote against a board proposal by Bank of America Corp. that would let the bank's chief executive, Brian Moynihan, keep the title of chairman.

The advisory firm generally supports having the role of CEO and chairman held by different people, and noted that Bank of America shareholders have previously voted to keep the positions separate.

"We do not believe the Company has provided sufficient rationale that shareholders should ratify the board's decision to repeal a hard-fought governance reform," Glass Lewis wrote in its report to clients.

Shareholders are scheduled to vote on the proposal at a special meeting on Sept. 22.

The Glass Lewis recommendation is the latest step in what could be a showdown between the bank and its shareholders over Mr. Moynihan's role. Institutional Shareholder Services, another influential proxy advisory firm, expects to release its recommendation on the Bank of America proposal "in the next few days," a spokesman said Wednesday.

A Bank of America spokesman said the board "recognizes that some have a fixed view on board leadership structure, but the board believes that it is in the best interest of shareholders to have the same flexibility that nearly all the S&P 500 companies already have in determining its appropriate leadership structure as circumstances warrant."

While most S&P 500 companies aren't restricted by bylaws requiring they have a separate chairman, about half of those companies do separate the roles, according to ISS' QuickScore database.

Glass Lewis said its recommendation wasn't to be interpreted as disapproval of Mr. Moynihan.

The bank's board last year added the title of chairman for Mr. Moynihan, the CEO since 2010. It was an unusual move because shareholders had voted in 2009 that the roles should be held by separate people, and shareholders' displeasure appeared to catch the board off guard.

The bank backtracked slightly this year by saying that shareholders would be allowed to vote, retroactively, on the decision, and the bank is preparing for that vote in less than three weeks. Last week, the CtW Investment Group recommended that investors vote against the bank. Two big pension funds, the California Public Employees' Retirement System and California State Teachers' Retirement System, said this week that they will also vote against the bank.

Bank of American has said it believes Mr. Moynihan deserves the role, for his work steering the bank through a pile of legal costs and loan losses. It has painted Mr. Moynihan's chairmanship as a promotion that signals that the bank is no longer in crisis mode.

The bank has also pointed out that other big U.S. banks, like J.P. Morgan Chase & Co. and Wells Fargo & Co., combine the roles of chairman and CEO under one person. Glass Lewis praised Bank of America for engaging with shareholders on the matter, but said that wasn't a convincing argument, saying that investors were "particularly concerned with the independence of Bank of America's board, specifically."

Write to Joann S. Lublin at [e-mail] and Christina Rexrode at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

September 02, 2015 18:35 ET (22:35 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.