Leadership at Bank of America has been girding for a tight vote on Tuesday expected to determine whether chief executive Brian Moynihan holds on to his title as chairman.
The bank will host a special meeting at its headquarters in Charlotte, North Carolina, at which shareholders will weigh whether to uphold his appointment in October 2014 as chairman. Moynihan has been chief executive of the second-biggest US bank by assets since 2010.
Analysts say the vote will likely come down to a handful of large institutional investors. Moynihan has been credited with stabilizing BofA after the financial crisis. At the same time, BofA has underperformed some other large banks by key benchmarks.
The board's decision to appoint Moynihan as chairman in 2014 has drawn heckles from some shareholders and influential shareholder advisory firms because it flouted a 2009 vote by a majority of BofA shareholders requiring the chairman to be an independent director.
BofA management has urged shareholders to validate its decision, arguing that there is no empirical evidence that splitting the chief executive and chairman posts improves governance.
The 2009 vote was held during a peak dissatisfaction period due to the financial crisis, BofA argues. Conditions in 2014 were "quite different from those in 2009," BofA said in a securities filing.
The board "should retain the flexibility to determine the Board leadership structure best-suited to the company's and Board's then-existing circumstances and personnel," BofA said.
Among those lining up against BofA are the large pension funds, the California Public Employees' Retirement System and the California State Teachers' Retirement System.
"The shareholders voted for a binding resolution separating the two seats back in 2009," said CalSTRS.
"This decision was unilaterally turned on its head, without consultation with the shareholders -- most of whom were around in 2009. There has never been a cogent business rationale for doing what the Board did."
Unifying the chief executive and chairman posts "present an inherent conflict of interest because the Chair represents the shareholders' interests, while the CEO represents management's interests," CalSTRS said.
BofA's stance has also been criticized by the shareholder advisory firms Institutional Shareholder Services and Glass Lewis.
Charles Elson, a corporate governance expert at the University of Delaware Alfred Lerner College of Business & Economics, said even a narrow win for BofA would be a setback for the bank.
"In a public corporation, you need to move with near unanimity," he said. "If 30 percent of your investors are opposed to what you are requesting, you've got a problem."