CalPERS, CalSTRS Disapprove of Bank of America Governance Shift

Two of the country’s largest pension funds this week have come out against a governance shift at Bank of America that would allow the chief executive and the chairman to be the same person.

CalPERS and CalSTRS sent a letter to the bank on Monday, explaining that combining the two positions would weaken oversight at the institution.

From Reuters:

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. They also said the company has never provided a valid business rationale for combining the roles.

[…]

The board of directors 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.

Combined, CalPERS and CalSTRS hold less than 1 percent of BoA’s outstanding shares.