Proxy Blog

Bank of America Corporation 

March 26, 2019

The annual proxy for this financial services company had the following proposals: 

  1. Proforma votes on directors, appointment of auditors, and “say-on-pay” advisory vote 
  2. Board proposal to amend the Key Employee Equity Plan 
  3. Shareholder proposals on written consent, gender equity, and shareholder proxy access 

Magni voted as follows: 

  1. For all proforma proposals.
    -Directors – The board has a majority of independent directors and some have CEO/CFO experience with other companies. The compensation of directors is disclosed with a meaningful portion in equity where the equity has restrictions to align director incentives with long-term value creation. 
    -Auditors – There appear to be no controversies with the financial statements of the company.
    -“Say-on-pay” – The proxy materials discussed a shareholder engagement effort with compensation being one of the topicsThe peer group for compensation benchmarking was identified, though the criteria for inclusion in the peer group was vague. While flawed, enough of the basic process for good governance is in place to justify a vote for the proposal. 
  2. For the board proposal on the equity plan as the plan is aligned with shareholder interests and having key people within the company focused on value creation is a good governance practice. 
  3. For and against the shareholder proposals.
    -Against proposal on written consent. Per the Magni position paper, Magni routinely votes against written consent proposals.
    -Against proposal on gender equity. Gender equity is an important issue. That said, there are two reasons for voting against the proposal. The first is the use of generic and inaccurate information in the shareholder’s supporting statement, along with the proposal requiring the company to report a misleading metric for gender equity. The second is the company’s prior and current efforts to address gender inclusion. The company has made good progress and should be encouraged to continue with its current efforts.
    -For proposal on shareholder proxy access. The current procedures have a high bar for getting on a proxy and then a two-year blackout period if the access fails to result in a successful election. The board should be responsive to shareholders. The proposal only eliminates the two-year blackout period. The proposal would make the board more responsive to shareholders and that is good governance.