Bank of America shareholders protest but approve CEO pay

Nelson D. Schwartz / New York Times News Service /


Published May 10, 2012 at 05:00AM / Updated Nov 19, 2013 at 12:31AM

CHARLOTTE, N.C. — Despite noisy protests inside and outside Bank of America’s annual meeting here Wednesday, shareholders signed off on the $7 million 2011 pay package for the chief executive, Brian Moynihan.

The company said 92 percent of shareholders voted in favor of the proposal, a so-called “say on pay” resolution that gives stockholders the opportunity to give a nonbinding thumbs-up or thumbs-down on executive pay.

Last month, about 55 percent of Citigroup shareholders voted against that bank’s compensation plan for its chief executive, Vikram Pandit, and other top officials there, and Wednesday’s vote was being closely watched for any sign that shareholder dissatisfaction was spreading to other financial giants.

Unlike in Citigroup’s case, however, shareholder-advisory services didn’t recommend a “no” vote for Bank of America. And Moynihan’s pay, which didn’t include a cash bonus and was mostly in the form of stock, received less attention at the annual meeting than Bank of America’s continuing problems in the mortgage arena.

One shareholder after another, many of them representing activist groups, blasted Bank of America’s foreclosure practices, which have been the subject of multiple state and federal legal settlements.

The company, the nation’s second-biggest mortgage servicer, acquired a huge portfolio of subprime home loans when it bought Countrywide Financial in 2008. Along with tens of billions of dollars in losses, an avalanche of souring subprime loans and other mortgages in default overwhelmed the bank’s own internal systems, resulting in long delays and a barrage of criticism from frustrated borrowers.

“What is it going to take for Bank of America to start abiding by the law and treating customers fairly?” one shareholder asked Moynihan, who listened politely to the criticism of the company, which is based here. “Bank of America is among the worst.”

“We follow the law every day,” Moynihan said, adding that Bank of America was busy “cleaning up” the mess left behind by Countrywide. “I think we’re doing everything we can.”

Outside the downtown auditorium where the meeting was held, several hundred protesters gathered despite a heavy police presence and a phalanx of Bank of America employees checking attendees. Protesters have interrupted other presentations by Moynihan as well as shareholder meetings of other large banks recently, and the company was not taking any chances.

“If you were a better corporate neighbor, you wouldn’t need to be so scared,” another speaker at the meeting said.

In response, Moynihan said, “I don’t feel threatened at all. We’re here to answer questions, and we’ll do it for the rest of the afternoon if that’s what it takes.”

In fact, Moynihan wrapped up the meeting shortly after noon, about two hours after it began, frustrating some shareholders and activists whose questions went unanswered. Besides the foreclosure issue, several audience members criticized the bank’s loans to coal producers as well as to companies that provide so-called payday loans.

But it was the foreclosure issue that drew the most furious criticism.

“I am an underwater borrower,” said one shareholder, Roger Davis of Ohio. “I want to keep my home. I’m a responsible homeowner, I’m a responsible American and I’m trying to do the right thing.”

Moynihan said that Bank of America had just begun sending out 200,000 offers to borrowers to reduce their principal under the bank’s $25 billion settlement over foreclosure abuses with state and federal authorities earlier this year, and had already made $700 million in principal reductions.

As for his pay package, which consisted of $6 million in restricted stock and $950,000 in cash salary, Moynihan said, “My pay is aligned with shareholders.”

In afternoon trading, Bank of America stock was down 2 cents to $7.77 a share.