Bank of America CEO Faces Shareholder Ire Amid Protests
Bank of America Corp., the second-biggest U.S. lender, is following a “disciplined” strategy to rebuild, Chief Executive Officer Brian T. Moynihan said today as protests swirled inside and outside the firm’s annual meeting.
Moynihan, 52, presided over a contentious two-hour gathering as shareholders pressed him on complaints ranging from mortgage practices and foreclosures to customer service and political contributions. One attendee at the Charlotte, North Carolina event lamented the lost value of his shares and referred to the bank as “a felon.”
“We abide by the law every day,” Moynihan said, adding that managers are cleaning up the bank’s practices and that 50,000 employees are giving borrowers “every chance” to get mortgage modifications. “I think we’re doing everything we can,” he said.
Investors and protesters from San Francisco to London have used shareholder meetings this year to denounce financial firms for making shoddy loans and overpaying executives. Bank of America’s stock has lost almost half its value since the start of 2010, when Moynihan was named CEO.
Much of the criticism stems from Bank of America’s 2008 takeover of Countrywide Financial Corp. The subprime lender has been blamed by lawmakers for fueling the housing collapse, by regulators for sloppy and discriminatory lending and by investors for driving more than $40 billion of costs tied to soured mortgages and improper foreclosures.
At least three speakers at the meeting told Moynihan that the bank has failed to improve mortgage servicing after years of complaints that employees gave wrong information, didn’t return phone calls and repeatedly lost paperwork.
“You’ve got to do something about your mortgage servicing,” one speaker told Moynihan. The CEO told borrowers in the hall and “everyone out there” that he personally pledged the bank would work with them. “You can call us and we will figure it out,” he said, eliciting laughter in the audience as he encouraged them to dial a toll-free number. Moynihan said 1 million modifications have been completed, “and I don’t think we could have done that without being competent.”
He fielded repeated pleas to halt funding for coal mining, including techniques that involve removing entire mountaintops because of the effect on communities and the environment, and some audience members accused the bank of ducking U.S. taxes. The CEO said coal funding would be reviewed and that the company has paid billions of dollars in taxes.
Marching on BofA
Hundreds of protesters in three separate marches converged on Bank of America’s headquarters, decrying foreclosure practices and what they called corporate greed.
Police flanked the marchers, who chanted, banged on drums and carried banners. A mock boxing match was staged between a Moynihan impersonator and a representative of the “99 percent” of people who aren’t in the wealthiest tier of Americans, meant to highlight income inequality. Police arrested at least four people, the Charlotte Observer newspaper said on its website.
Metal barricades kept protesters away from the building entrance. Judith Koenick, with one arm in a sling, held a placard that read, “Bank of America stole $500,000 from me.” She was asked to give up the sign before entering the auditorium.
Koenick, a retiree from Chevy Chase, Maryland, said the lender’s share decline forced her to liquidate holdings and make do with less income from dividends. Bank of America has a 1-cent quarterly payout, down from 64 cents before the financial crisis.
Timers With Chimes
“He has the audacity to get up there and say he’s not responsible for the things that Countrywide did,” Koenick said after the meeting. “They bought it.”
Inside, investors as well as Bank of America’s workers wore stickers that said “Shareholders 2012,” with a different color for the staff. The label referred to the event rather than the individual, according to Scott Silvestri, a company spokesman. Moynihan set a two-minute limit on individual comments and questions with a timer and a chime, and banned the use of recorders and electronic devices.
Charlotte city managers said last month that Bank of America’s meeting is an “extraordinary event” that merits special restrictions on people near the site to prevent violence, according to the Charlotte Business Journal.
‘Don’t Feel Threatened’
When a shareholder complained about the level of security, Moynihan said the rules and measures were meant to protect everyone. “I don’t feel threatened at all,” he said.
The Charlotte ordinance, drawn up for the Democratic National Convention later this year, gave police broader powers to search individuals, outlawing items including permanent markers, lumber, pepper spray and padlocks. The Observer reported that police didn’t use the authority they had been granted to search backpacks and other containers.
The measures didn’t prevent more than two dozen members of a group called National People’s Action from attending the meeting. When Moynihan declared the event over, the activists stood up and shouted anti-Bank of America slogans until leaving at the behest of police.
“Many of you people may think there are a lot of crazies here today, but this is a pushback,” an attendant told Moynihan moments before. “You’re hearing despair.”
Members linked to Occupy Wall Street are among groups seeking to revive last year’s protests against the nation’s biggest banks for their role in causing the financial crisis and gaps between the incomes of the richest and poorest citizens.
Last month, more than 500 people gathered at Wells Fargo & Co. (WFC)’s San Francisco headquarters to disrupt the firm’s annual meeting. About two dozen were arrested as protesters chained themselves together to block an entrance to where the meeting was held, and police helped clear a path for shareholders.
In New York, Citigroup Inc. (C) shareholders rejected the firm’s executive-pay plan on April 16, the first time that’s happened among the six largest U.S. banks. Directors awarded Chief Executive Officer Vikram Pandit, 55, about $15 million for 2011 plus a multiyear retention package that may be worth $40 million. While the bank promised to meet shareholders to consider changes, no revisions have been announced.
Moynihan was awarded a $7 million pay package for last year, with shareholders approving the compensation plan in an advisory vote today with 92 percent of the ballots, according to a preliminary tally. Citigroup and Bank of America accepted $45 billion each from U.S. taxpayers to help them survive the financial crisis. The firms have since repaid the bailouts.
In Europe, Andrew Moss quit as CEO of Aviva Plc (AV/), the second-biggest U.K. insurer, after investors voted down the compensation plan, and Barclays Plc (BARC) chief Robert Diamond was heckled over pay at the annual meeting. Investors also staged protests at UBS AG and Inmarsat Plc (ISAT) for failing to keep compensation in line with stock performance.
To contact the reporter on this story: Hugh Son in New York at email@example.com