News Column

Bank of America Battling Stockholder Proposal on Political Spending

Jan. 26, 2013

Andrew Dunn, The Charlotte Observer

Jan. 26--Bank of America has succeeded in keeping stockholder proposals on the bank's dividend and executive pay off its upcoming annual meeting ballot -- but the Charlotte bank is still battling one that would limit its political spending.

Filed by an affiliate of the advocacy group United for a Fair Economy, the proposal would prohibit Bank of America from using corporate money for political purposes, either directly or indirectly through trade groups.

Such shareholder proposals are common, but they rarely gain traction. A collection of advocacy groups filed similar proposals at a half-dozen other companies this year. Last year, a similar proposal to ban political spending at Bank of America appeared on the ballot, but it was voted down decisively.

Why file proposals against such long odds? "In many instances, corporations actually pay attention," said Stephen Johnson, a Greensboro applied psychologist who filed the stockholder proposal for United, though he noted that Bank of America has not discussed it with him. "Sometimes those little prods help."

In a formal response to the Securities and Exchange Commission provided to the Observer, the bank argued the proposal is "impermissibly vague" and too similar to another proposal the bank already intends to allow on the ballot. That would be one put forward by shareholder Amalgamated Bank that would require Bank of America to disclose all of its corporate political spending. A similar proposal was voted down last year.

Mike Lapham of United for a Fair Economy said the group intends to continue pushing its proposal. A Bank of America spokesman declined to comment. The bank already does not donate directly to political candidates.

It is unclear from the proposal exactly what categories of political spending would be prohibited, but in 2012 the bank gave $5 million to a nonprofit set up by the Democratic National Convention host committee and spent $1.9 million on lobbying through September.

The SEC has ruled that Bank of America could leave two proposals off this year's ballot after agreeing with the bank's challenges. To submit a proposal, a stockholder must have owned at least $2,000 worth of a company's stock for a year.

The first sought to calculate Bank of America top executives' pay for the next five years by multiplying their 2006 pay levels by the performance of the bank's common and preferred stock between 2006 and the present. The bank's common stock has lost 75 percent of its value since the beginning of that year, when it traded around $46 per share.

Bank of America argued that the petitioners failed to prove that they owned the bank's stock for a long enough time, after being asked to do so, according to a memo from attorneys representing the bank.

The second stockholder proposal would require the bank to give a quarterly update on its progress toward restoring its dividend and stock repurchasing levels to what they were at the beginning of 2008. At the time, Bank of America had a quarterly dividend of 64 cents per share. During the financial crisis, that plummeted to 1 cent per share, where it has stayed.

Bank executives have been loath to give details on their dividend and stock buy-back plans, which now require approval by the Federal Reserve.

Bank of America was able to exclude this proposal using the same argument.


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