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More Momentum for Independent Chair CampaignSubmitted by: Ted Allen, Publications

Yesterday?s 50.3 percent investor vote at Bank of America for a binding independent chair proposal should provide more momentum for the shareholder campaign for this reform. The Charlotte-based banking company responded by stripping CEO Ken Lewis of his chairmanship and appointing Dr. Walter Massey as chairman.

The vote on the independent chair proposal is the third majority vote this year (in addition to Weyerhaeuser and Office Depot), and is further evidence that these resolutions are getting broader support from institutional investors. The vote also is the highest ever for a binding proposal on this topic. So far, independent chair proposals have averaged 39.2 percent support at 11 U.S. companies where preliminary results are available, up from 29.3 percent in 2008, according to RiskMetrics Group data.

?I think the issue of an independent chair has finally resonated with mutual funds and other large institutional investors as an effective mechanism to begin balancing risk and risk management at the board level,? said Tracey Rembert of the Service Employees International Union, which filed the proposal at Bank of America. ?The financial crisis--and utter mismanagement of some financial companies--has helped to mainstream the issue as a governance centerpiece on its own merits also.?

Bank of America is the latest large financial firm to appoint an independent chair in response to shareholder demands. Before the global financial crisis began in 2007, none of the major Wall Street or banking firms had independent board chairs. Washington Mutual and Wachovia appointed independent chairs in 2008 after significant shareholder support for the reforms. In February, Citigroup appointed Richard Parsons to replace Win Bischoff, a non-independent director who became chair in December 2007 after the ouster of CEO and Chairman Charles Prince.

Also this week, a binding independent chair proposal received 30.4 percent support at Wells Fargo, up from 28.3 percent last year. Independent chair proposals are slated to appear on the ballots at Time Warner on May 1, CVS Caremark (May 6), Verizon Communications (May 7), Prudential Financial (May 12), Pulte Homes (May 14), and ExxonMobil (May 27).

Full post as published by Institutional Shareholder Services -- Corporate Governance Blog on April 30, 2009 (boomark / email).