Almost 14 years since European markets firmly embraced the concept of separating the role of Chair/CEO,  most US issuers are still contemplating what it means for them. That could be set to change following the success of trade union SEIU’s proposal to reform the Bank of America board.

The proposal to amend BoA’s bylaws requiring an independent chairman was passed by a majority vote of 50.34%. In a press statement, SEIU said that this was the first time that an S&P 500 company had its by-laws amended by shareholders. “Today, we saw a vote of no confidence in Ken Lewis who has overseen record losses in stock value and whose short-sited business plans have put personal gain ahead of shareholders and the long-term health of the company,” said SEIU Master Trust Chairman Andy Stern.

Following a board meeting at which Lewis received unanimous support for him to continue as presdient and chief executive, Walter Massey was elected as Chairman. Commenting on the result, Scott Fenn, Managing Director of Policy at ProxyGovernance said: “the vote shows that CEOs need to understand who’s interests they are ultimately responsible for – their shareholders – and that failures to uphold this trust are going to have consequences.”

Scott noted that the market will be watching future developments closely: “It will be interesting to see whether Lewis can be effective as CEO after this vote. The last major bank CEO who lost his chairmanship in the US, Kerry Killinger at Washington Mutual, lost the confidence of his board and was ousted as CEO within three months”.

Last Updated: 30 April 2009