Forum Home Page [see Broadridge note below]

 The Shareholder ForumTM`

Fair Investor Access

This public program was initiated in collaboration with The Conference Board Task Force on Corporate/Investor Engagement and with Thomson Reuters support of communication technologies. The Forum is providing continuing reports of the issues that concern this program's participants, as summarized  in the January 5, 2015 Forum Report of Conclusions.

"Fair Access" Home Page

"Fair Access" Program Reference


Related Projects 2012-2019

For graphed analyses of company and related industry returns, see

Returns on Corporate Capital

See also analyses of

Shareholder Support Rankings


Forum reference:

Growing concerns about private corporate negotiations favoring some activists over other investor interests


For previous articles addressing one of the examples of management concessions to factional investor interests cited below, see


Source: Fortune, September 9, 2015 commentary

Leadership  Activist Investors

How companies like Bank of America are opening their doors to hedge fund activists

by Eleanor Bloxham         September 9, 2015, 1:27 PM

Photograph by Ramin Talaie — Getty Images


When boards allow their weaknesses to fester, they lay out the welcome mat for shareholders who want to shake things up.

Has Bank of America opened the door to hedge fund activists? It sure looks like it.

Buzzy Geduld, “who owns 2.5 million Bank of America shares as head of New York-based hedge fund Cougar Capital” is already threatening chairman and CEO Brian Moynihan, according to a report from Bloomberg last month. Geduld wants to see the CEO and chair jobs split at the company. “I’d like to see someone from the outside who’s smart enough and strong enough that Moynihan’s going to have to answer to,” the hedge fund manager told Bloomberg. And if Moynihan can’t satisfy the Federal Reserve that he’s fixed risk issues by the end of the month, “I’d call for his head,” Geduld said.

At Bank of America (BAC), like so many other companies across the country, governance and operational weaknesses act like an open invitation to hedge funds. When boards allow these vulnerabilities to fester—or create them themselves—they might as well lay out the welcome mat and say, “Howdy, y’all, come on in.”

A CEO and chair split at Bank of America has been a touchy subject for some time. In 2009, when former CEO and chair Ken Lewis was facing battles on every front, shareholders voted to split the roles. But in October of 2014, the bank’s board of directors flouted the shareholder vote and “unilaterally changed the company bylaws to allow CEO Brian Moynihan to become chairman,” CNBC reported. This May, after shareholder protests and facing no votes on members of the board’s governance committee, Moynihan and Jack Bovender, Bank of America’s lead director, agreed to call a special meeting on Sept. 22 to get shareholder approval for the board’s change.

Making a bylaw change contrary to a shareholder vote can create upheaval. Such a move landed restaurant company Bob Evans in hot water last year with activist firm Sandell Asset Management. Although the board reversed its position, only two of its board members still hold their seats. Michael Pryce-Jones, director of corporate governance at CtW Investment group, says the unilateral bylaw change at Bank of America “undermines Moynihan and is a no-win for the company.”

Pryce-Jones is also concerned about the frequency with which companies are giving hedge funds seats without a say from other shareholders. “Backroom deals are giving hedge funds an outsize influence,” he told me. According to a Wall Street Journal report, “Last year, activists gained board seats at a record 107 companies, 91 of them through pacts negotiated with the companies.” That’s 85% of the time—and Pryce-Jones says there is “a lack of transparency around these deals” that’s unfair to other shareholders.

Some companies even give seats to hedge funds while at the same time opposing proxy access. (Proxy access allows investors with a certain percentage of shares to nominate directors onto the company’s official slate.) Although Bank of America has adopted shareholder proxy access, Pryce-Jones cites Walgreen (WBA)  and Cheniere Energy (LNG) as two companies that cut deals with activists for seats but have refused to implement proxy access for long-term investors. Activist Jana Partners was given Walgreen board seats last year, yet the board opposed an orderly proxy access process recommended by shareholders this year. Carl Icahn was given board seats in August at Cheniere, but at its annual meeting, the board opposed proxy access.

The saga at Bank of America isn’t happening at a great time for Moynihan. The bank’s stock is currently hovering at a third of its 2006 pricing. And Cougar Capital isn’t alone in mentioning performance as an issue. In an Aug. 31 letter to Bovender, giant pension funds CalSTRS and CalPERS announced their intention to vote against the board’s bylaw change. The letter said that “Bank of America continues to be an under-performer” and expressed concerns about the bank’s stress test failures.

Perhaps by October, the Charlotte-headquartered bank will come out smelling like a rose. But the next 30 days are definitely showtime for Moynihan and the board.

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (, an independent board education and advisory firm she founded in 1999. She has been a regular contributor to Fortune since April 2010 and is the author of two books on corporate governance and valuation.


This Forum program was open, free of charge, to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the purpose of this public Forum's program was to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant was expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program was initiated in 2012 in collaboration with The Conference Board and with Thomson Reuters support of communication technologies to address issues and objectives defined by participants in the 2010 "E-Meetings" program relevant to broad public interests in marketplace practices. The website is being maintained to provide continuing reports of the issues addressed in the program, as summarized in the January 5, 2015 Forum Report of Conclusions.

Inquiries about this Forum program and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.