March 19, 2015 – Napa, CA – Bank of America shareholders can now look forward to nominating candidates to the Board of Directors in a deal negotiated by John Harrington, CEO of Harrington Investments, Inc., (HII) a socially responsible investment advisory firm based in Napa. The Bank adopted new “proxy access” bylaws reflecting changes driven by Harrington’s shareholder resolution.
Proxy Access allows shareholders to directly nominate a limited number of candidates to the Board of Directors. Under the Bank’s new rules, as many as 20 stockholders who together have owned 3% of the company stock for 3 years, may form a group to nominate up to 20% of the Board candidates. Until Bank of America amended their bylaws, only incumbent board members selected a sole slate of candidates.
“The overwhelming majority of legal owners of corporations are still unable to nominate independent directors to represent shareholders,” Harrington said. “Corporate board membership is self-selecting, self-serving, self-perpetuating, and without meaningful accountability. This success with proxy access is the first step in allowing stakeholders, as owners, to have input into the corporate board room,” said Harrington.
Shareholders have unsuccessfully attempted to have the power to nominate directors for more than 80 years, and while it was mandated by the Dodd-Frank Act in 2010, the conservative Chamber of Commerce and Business Roundtable won in federal court to void regulations adopted by the U.S. Securities and Exchange Commissions.
Earlier this year Harrington won a shareholder vote on proxy access at Monsanto, becoming among the first successful proxy access proposals in the country, and on March 10th the proxy access proposal co-filed at Apple won 40% of the votes. Harrington also has similar proposals before shareholders at Anthem and Coca Cola later this spring.
Harrington said the self-nominating process currently used by most boards results in the nomination and election of the same people again and again, with similar perspectives and social and educational backgrounds — statistically, mostly wealthy white men from the corporate sector.
Most boards are comprised of corporate CEOs or retired CEOs, each who sit on numerous other boards and have little time for competent, professional oversight and policy direction, Harrington said.
“Most board members don’t even come from important stakeholder communities, including institutional investors, employees or customers,” he said. “Especially missing are stakeholder communities comprised of diverse color, ethnicity, and sexual orientation.”
Harrington also sees the current process of selecting board directors as partly responsible for the denigration of a traditional understanding of fiduciary duty as a moral obligation. Simply put, there was a time when ethical behavior was an essential part of doing business. “The law required directors to be obligated to stakeholders based on an ethical relationship of trust,” he said.
“Today,” Harrington added, “the only loyalty or interest is absolute power, control and maximizing materialistic self-interest, and the interests of its board of directors, even if it means possibly engaging in unethical or illegal activities. I think shareholders are disgusted with that kind of conduct, which violates common decency, morality and acceptable human behavior.”
Harrington Investments, Inc. is a 33-year old Registered Investment Advisor, managing over $190 million in assets for individuals and institutions, requiring social and environmental, as well as financial return. The company manages assets utilizing a comprehensive social criteria, engages in shareholder advocacy, and implements a policy of impact investing in for-profit as well as non-profit enterprises.
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