Views on improving the integrity of global capital markets
03 September 2015

Joint CEO-Chairman Role: Is Bank of America Backsliding on Corporate Governance?

Bank of America is planning to hold a vote on 22 September to approve bylaw changes made last year that would allow its CEO, Brian Moynihan, to become board chairman. The bank changed its bylaws in October 2014 without consulting shareholders to allow the combined role but now must ratify them with a shareowner vote.

Because investors voted to separate the jobs in 2009, it’s not surprising that the plans have met a cold response from some in the investor community. Two large institutional investors, California Public Employees’ Retirement System and the California State Teachers’ Retirement System, have been vocal in their opposition to the plan.

Others have scheduled a meeting with Bank of America management to get more information on the plan before they vote.

Should the CEO and Chair Positions be Combined or Separated?

Look at it this way: If you were given a job and then told you could head the body that oversees that job, judges the performance of that job, and ultimately decides remuneration for that job, would you pursue it? Of course you would. But should you be offered that position in the first place? There is a conflict of interest when you are both chairman and CEO.

Of course there are often controls on the power of a CEO who is also board chairman. They usually do not sit on the compensation committee that decides their pay, or on the audit committee that reviews the company’s financials. Many companies have also appointed a lead independent director to mitigate some of the conflicts inherent when a chair is also CEO. But the chairman still sets the terms of discussion at the board and is ultimately in control of the body that is to oversee and have ultimate hiring and firing authority over the position of CEO.

According to last year’s Spencer Stuart Board Index, about 53% of the boards in the S&P 500 have a combined chair/CEO, down from 74% in 2004 (see page 8 of the report). Clearly the trend is to separate the positions; an acknowledgement by many companies that separating the positions is just good governance. However, in another high-profile case, shareholders in 2013 rejected a proposal to split chairman and chief executive officer roles for JPMorgan’s Jamie Dimon.

In bringing up the vote that would allow the change, the Bank of America board has cited Mr. Moynihan’s leadership as a reason for a change to the company’s bylaws that would allow him to hold both positions. But is potentially weakening a company’s corporate governance a way to reward a CEO?

Simply put, no it is not.

My annual review is coming up next week, and if my boss says that my performance has been very good or improved over last year, I will ask to head the body that judges my performance. I’ll let you know how that goes.

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Image Credit: E_Y_E

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a director of capital markets policy at CFA Institute, where he focuses on corporate governance issues. He was named one of the 2008 “Rising Stars of Corporate Governance” by the Millstein Center for Corporate Governance and Performance at the Yale School of Management.

4 thoughts on “Joint CEO-Chairman Role: Is Bank of America Backsliding on Corporate Governance?”

  1. Richard Biritwum says:

    You’ve make the best case for me NOT to vote to have Mr. Moynihan have both roles at the same time.

    Bank of America hasn’t had great governance in the previous 10 years and were deep in the recessionary habits that Banks engaged in preceding the recession of 2007-2008.

    I agree with you that Moynihan shouldn’t be both the CEO and the Board Chairman and will vote NO when my prospectus arrives.

    Thanks for your powerful article.

  2. Matt Orsagh, CFA, CIPM says:

    Thanks for your comment Richard. We hope that our writing is informative and are glad to see that you feel that it is.

    Take care.

  3. Barbara Petitt says:

    Sir Adrian Cadbury, who passed away a few days ago, played an important role in setting corporate governance standards. One of them was the separation of the Chairman and CEO roles. Although it is now widely adopted in many countries in Europe and Asia, corporate America seems more reluctant to follow suit.

    1. Matt Orsagh, CFA, CIPM says:


      While it seems that the US model of board governance may seem to be slow to adopt a separated chair and CEO, the proportion of combined chair/CEOs in the S&P 500 has gone from about three-quarters to about one-half over the past 10 years. So taking the long view on the issue we can say that progress is being made – though not at the pace that some in the governance community would prefer.

      Take care,


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