Resolved:
Shareholders request that the Board of Directors undertake a review and institute policy changes, including amending the bylaws and any other actions needed, to minimize the indemnification of directors for civil, criminal, administrative or investigative claims, actions, suits or proceedings, to the fullest extent permissible under the General Corporation Law of the State of Delaware and other applicable laws. Such policies and amendments should be made effective prospectively only, so that they apply to any claims, actions, suits or proceedings for which the underlying activities occur and the claims are asserted subsequent to both the enactment of the policy changes and the renewal of the director’s board membership and contract.
Supporting Statement:
The proponent is convinced that Bank of America’s policy of maximum indemnification of directors — even with respect to some illicit or illegal activities that may violate their duties as fiduciaries — provides excessive shelter of directors.
In 2010, San Jose, CA announced that it had diverted roughly $1 billion away from Bank of America. That move has been followed by many others. [moveyourmoneyproject.org/success-stories] Considering that our bank has been accused by the U.S. government of systematically defrauding schools, hospitals, and dozens of state and local governments over the course of many years, [Washington Post, 12/8/10] it should come as no surprise that we are losing important accounts in a very public way.
The FDIC is objecting to our company’s decision to move risky derivatives from a Merrill Lynch unit to a subsidiary “flush with insured deposits.” Why don’t our directors seem inclined to question the propriety of this move? Our bank “doesn’t believe regulatory approval is needed.”[Bloomberg, 10/18/11] Considering our company’s credit was downgraded in October, and 3 years ago we accepted more than $91 billion in taxpayer funds, the proponent questions whether our executives are in the position to dispute the FDIC’s judgment. [Business Insider, 8/22/11]
Instead of investing TARP funds in American families by implementing mortgage modification programs, our managers continued paying themselves outrageous sums. In 2010, our CEO earned roughly $10 million in compensation. Our directors approved that compensation package.
A multi-billion dollar settlement resulting from the imprudent and hurried purchase of Countrywide Financial will wipe out a significant portion of our profits this year. [New York Times, 6/29/11]
The proponent does not trust that our balance sheet is as strong as our executives claim. The proponent believes that directors are not exercising adequate oversight.
Director indemnification by the corporation means that directors may not be held personally liable for actions on behalf of the corporation, even if those actions are reckless or otherwise neglect fiduciary duties. Corporate protection and insurance coverage eliminates personal exposure of directors associated with improper, illegal or criminal behavior violating fiduciary duty.
The proponent’s intention is to incentivize company directors to exercise maximum fiduciary oversight of a corporation that is clearly in need of supervision and accountability.