Bank of America insiders are worried that it is close to an embarrassing slap down


Bank of America's plan to consolidate leadership of the top of the organization is getting some shareholder backlash.


The U.S. bank last October named chief executive Brian Moynihan as chairman of the board, undoing an earlier shareholder vote in 2009 to split the roles.

Shareholders will vote on the move on September 22, and some bank officials have been telling investors the vote could go either way, according to Christina Rexrode and Joann S. Lublin at The Wall Street Journal. ?

Trillium Asset Management has voted against the proposal, while Korea Investment Corp., South Korea's sovereign-wealth fund, also plans to vote against it, according to the Journal.

Some of Bank of America's shareholders would also like to install new directors, according to the report, replacing those that were in place prior to the financial crisis.


A defeat would represent an embarrassing moment for the board of Bank of America, which decided to combine the roles and then agreed to have a vote after the event following shareholder complaints.

Business Insider previously reported that smaller shareholders including public pension funds and money managers are pushing against the consolidation of power.

Public pensions CalPERS and CalSTRS have promised to vote against the change, along with CtW Investment Group. CtW invests on behalf of pensions. While the pension funds and their representative hold less than 1% of Bank of America's stock, their staking out a public position in advance of the shareholder vote is a statement of intent.

"This is a big move by CalPERS and CalSTERS," CSLA banks analyst Mike Mayo told Business Insider in early September. "They are leading indicators for sentiment."

Moynihan does have his plaudits however, including billionaire investor Warren Buffett. Business Insider reached out to Buffett, who took a huge stake of Bank of America preferred stock and warrants four years ago, and asked for his take on the bank's shareholder vote coming up later this month.


The Oracle of Omaha, according to a representative for Berkshire, is "100% in support of Mr. Moynihan and believes he is doing an outstanding job for Bank of America shareholders."

"When he took over as CEO, he was handed one of the toughest jobs in the history of American banking."

Barney Frank, the former House Financial Services Chairman, told Politico's Morning Money on Sunday that he didn't understand the argument against combining the chief executive and chairman posts.

He said: "There is no evidence supporting it ... And I have a very good opinion of Brian. ... He was very supportive in creating the CFPB [Consumer Financial Protection Bureau], very helpful. ... The argument that good governance requires having a separation I just don't understand."

Bank of America meanwhile views the push to consolidate its leadership as a step toward aligning itself with marketplace standards, and not as a deviation from sensible governance.


"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," a spokesman for the bank told Business Insider earlier this month.

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