The California Public Employees' Retirement System (CalPERS) today announced its opposition to the re-election of six Bank of America directors who failed to fully disclose the true financial condition of Merrill Lynch before the controversial merger in September 2008.
CalPERS will cast “withhold” votes from directors Frank Bramble, Virgis Colbert, Charles Gifford, Monica Lozano, Thomas May and Charles Rossotti at Bank of America's annual general shareowners meeting on April 28.
“Shareowners did not have complete or accurate information prior to approving the merger, and Bank of America's stock price fell dramatically,” said Senior Portfolio Manager Anne Simpson, who heads the CalPERS corporate governance program. “Moreover, Merrill executives received bonuses that weren't disclosed to us before the merger.”
The six incumbent directors were among all 18 Bank of America directors whom CalPERS opposed last year. Also on this year's proxy ballot are seven other Bank of America directors who weren't on the board during the Merrill Lynch merger and whom the pension fund supports.
“The Bank of America board can restore investor confidence by demonstrating competence, independence and its ability to stay on top of challenges,” Simpson said. “To do this, the company needs to set out clearly how it is addressing succession planning. With the turmoil of the financial crisis, and the painful search for a CEO and now the need to appoint a chairman, some disclosure around this issue would be extremely valuable.
CalPERS will vote for all seven shareowner proposals on the ballot, including one giving shareowners the right to cast an advisory vote on executive compensation. One of the four management proxy proposals, all supported by CalPERS, also is for an advisory vote on compensation.
The pension fund's Bank of America action is related to an engagement campaign begun this year with eight major financial sector firms over key corporate governance issues.
CalPERS has more than $1.1 billion invested in Bank of America stocks and fixed income securities. Its proxy votes are on the System's Web site at www.calpers-governance.org.
With approximately $213 billion in assets, CalPERS is the nation's largest public pension fund. It administers retirement benefits for more than 1.6 million active and retired State, public school, and local public agency employees and their families. For more information about CalPERS, visit www.calpers.ca.gov.