Risk & Compliance

Bank of America Gives Shareholders “Meaningful Access”

The financial institution becomes the latest to adopt proxy access rules at the urging of large pension funds.
Katie Kuehner-HebertMarch 23, 2015

Bank of America is now letting some of its long-term investors nominate board directors, at the same time that the Securities and Exchange Commission is letting the financial services company’s shareholders vote to consider breaking up the company.

The Charlotte, N.C. company said in an SEC filing last week that its board had approved an amendment to the bylaws to permit a stockholder, or a group of up to 20 stockholders,who have owned at least 3% of the company’s stock for three years, to nominate directors constituting up to 20% of the board. The shareholders would be able to include those nominations in the company’s annual meeting proxy materials.

A Bloomberg article last week noted that BofA is the latest company to adopt “proxy access” rules pushed by pension funds.

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“Pension funds have been pushing companies to adopt such rules after the near collapse of the U.S. financial system showed some corporate boards weren’t doing a good job of overseeing risks,” according to Bloomberg.

New York City Comptroller Scott Stringer, who manages more than $160 billion in retirement funds, told Bloomberg that BofA adopted the rules after talks with pension funds in California and New York.

“Proxy access has been fought tooth and nail by corporations since the collapse of Enron,” Stringer told Bloomberg. “Now we are seeing a sea change as more and more companies adopt meaningful access.”

Separately, a New York Times story last week said that the SEC is giving the green light to BofA’s shareholders to vote at the company’s annual meeting on whether management should contemplate spinning off the Merrill Lynch investment bank.

“Bartlett Naylor, who has submitted the Bank of America proposal on behalf of the nonprofit group Public Citizen, isn’t demanding immediate action to offload the investment bank,” the Times wrote. “He simply wants a vote on whether the $170 billion lender should consider setting up a committee of independent directors to make plans for breaking off noncore businesses.”

The move is “pretty uncontroversial,” considering that the country’s largest banking companies already have to tell regulators in so-called “living wills” how they could be broken up in times of crisis, according to the Times.