CalPERS Protests Bank of America CEO Pay

April 12, 2000 ( - Showing its muscle as institutional investor, CalPERS is withholding its 1% proxy voting block of 9.6 million shares from re-electing Bank of America's compensation committee members. The bone of contention is a $76 million compensation package awarded in 1999 to Bank of America Chief Executive Hugh McColl.

Saw Earnings Lagging

The $168 billion California Public Employees’ Retirement System took this stand after noting the nation’s second largest bank holding company:

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  • had a 16 percent earnings shortfall
  • imposed a stringent cost-cutting program
  • laid off 19,000 employees.

Bank of America spokesman Peter Magnani said the board approved the following pay package for McColl in June 1999, after record quarterly earnings:

  • Salary of $1.25 million
  • Bonus of $2.5 million
  • Stock awards of $44.7 million
  • Stock options valued at $27.2 million
  • Other compensation of $319,442.

Prodding Others

The proxy action, posted on CalPERS’s corporate governance Web site, may influence other shareholders to follow suit. But unless that occurs, the protest gesture will not influence the election outcome at the bank’s annual meeting April 25.

CalPERS has not put forth any specific proposals for action around this matter, according to its Public Affairs spokesman Brad Pacheco. “There wasn’t any desired action that we’ve asked Bank of America. This is just to voice our concerns as one of the largest institutional investors,” said Pacheco. “We can rally other investors, that’s one of the reasons we have this website on corporate governance.”

Focus List Pays Off

Bank of America is one of 1600 US corporations in which CalPERS currently invests. It is not the only one under its corporate governance scrutiny. In February, 10 other underperforming companies were placed on the Web site’s Focus List.

Wilshire Associates reported in a recent study that CalPERS’ Focus List companies trail the S&P 500 Index by 89% for five-year periods before listing, and outperform the index by 23% in the five years following listing.

For more information about CalPERS proxy votes, visit