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The Wall Street Journal reports (subscription required) that momentum is building behind a shareholder proposal that would separate the role of chairman and CEO at Bank of America (NYSE: BAC). The company's annual meeting will be held on April 29 and has the support of Proxy Governance, a leading proxy advisory firm. The proposal is sponsored by the Service Employees International Union.There are two angles to this. The first is that chairman and CEO Ken Lewis is a discredited clown who has presided over a level of value destruction with few historical precedents. That he has a job at all anywhere is amazing and disappointing, so of course it would be great to find someone else to be the chairman if he must remain as CEO.
The other issue here is that the separation of the chairman and CEO titles is almost universally regarded as a best practice of corporate governance. The highly-respected Institutional Shareholder Services includes this factor in the calculation of its Corporate Governance Quotient, and with good reason: A CEO who controls the board of directors and has no equally powerful counterpart may be allowed to pursue an overly ambitious agenda of empire building with little regard for risk management or shareholder value: Ken Lewis is the posterchild for this.
A proposal just like this one won the support 37.6% of votes cast at last year's annual meeting and I can't help but wonder: If the roles of chairman and CEO had been separated then, might Bank of America have avoided the acquisitions of Countrywide Financial and Merrill Lynch that have torpedoed its balance sheet?
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