Bank of America CEO fights to remain chairman
Bank of America Chief Executive Brian Moynihan has the look of a winner — one who went through the wringer.
Betting money has it that the head of the nation’s No. 2 bank BAC, +0.99% will retain the chairman title, but will be weakened following the tough fight to keep it.
Moynihan is telling people close to him that he expects to succeed in his effort to retain his chairman and CEO roles at a critical shareholder vote on Tuesday.
Several analysts also told The Post they believe he will keep the top two leadership roles over the objections of shareholder activists.
“I think it’s likely [Moynihan and the board] will get what they want,” Erik Oja, analyst at S&P Capital IQ, told The Post. “The large institutions will line up with Brian Moynihan.”
The B.of A. board last year added the chairman title to Moynihan’s resume, overriding an earlier shareholder vote to keep them separate. After shareholders objected to the move, the bank agreed to put the matter to a vote this month.
Moynihan has major boosters. Warren Buffett, who has invested in the company but doesn’t own shares, said he is doing a “first-class job.” Former Wells Fargo boss Richard Kovacevich and ex-FDIC chair Sallie Krawcheck also publicly supported him.
But even if Moynihan prevails, it comes at a price. For months, the bank has been busy lobbying shareholders big and small — a distraction from everyday business. Shares have fallen 13% this year, to $15.55, and trail Citigroup C, +0.98% , Wells Fargo WFC, +1.29% and J.P. Morgan Chase JPM, +1.18% .
Moynihan’s reputation has also taken a hit. The two biggest pension funds and several proxy advisory firms publicly came out against him.
What’s more, CLSA analyst Mike Mayo, a vocal critic of the bank, has said that Moynihan doesn’t deserve the chairman title, saying weak corporate governance could lead to further financial crises.
While Moynihan expects to eke out a victory, the vote is going down to the wire.
B.of A. is one of the most widely held stocks in the U.S., with more than 10 billion shares outstanding and no single investor is large enough to have more than about 6% of the vote.
That means despite the chief’s big-name support, the result could hinge on who shows up to cast a vote.
“[Losing] is within the realm of possibility depending on the number of shares voting, depending on what the actual turnout is like,” Oja said.
He added that even if Moynihan loses the chairman title, he wouldn’t expect the 55-year-old chief to retire.
In October, B. of A.’s board anointed Moynihan, who had been CEO since 2010, as chairman, arguing that he deserved a promotion for leading the bank through the financial crisis and boosting its stock price.
But in 2009, B. of A. investors were pretty sure that the bank needed greater oversight after predecessor Ken Lewis made two disastrous deals, Countrywide and Merrill Lynch, that nearly killed the firm.
The bank maintains that it’s a different company than it was in 2009, having sold off most of the legacy assets from the Countrywide deal that helped spark Lewis’s ouster and the first shareholder revolt.
Source: MarketWatch
