Bank of America is making a mockery of bank oversight by seeking to combine the role of board chair and chief executive, CLSA analyst Mike Mayo said Tuesday.
"This is not a philosophical view that the position should always be separated, but if a board like Bank of America has bad oversight, which we think they do, you should not take actions that reduce that oversight," Mayo told CNBC's "Squawk Box."
The shareholders will meet on Sept. 22 to vote on a proposal to make official the combination of the CEO and chair roles. The board named CEO Brian Moynihan chairman in October after Charles Holliday stepped down.
"It's not only important for Bank of America shareholders. It's important for the banking industry," he said. "We believe that the actions taken by the board of Bank of America make a mockery of the industry's efforts to improve oversight of the banks since the financial crisis."
Mayo has long advocated against the move, saying it rewards the bank's leadership following a bad year in which it made a $4 billion regulatory capital misstatement and fared poorly in a Federal Reserves stress test.
The Federal Reserve approved Bank of America's stock buyback plan in its latest stress test in March, but said the company needed to address perceived weaknesses in its capital strategy plan.
Bank of America must put in place better board oversight and produce a "full clean year" with improved financials and better stress test results before considering the combination, Mayo said in a recent note. The note also said keeping the positions in one hand could make the bank a bigger target for regulators.
The bank defended the plan.
"The board believes that having the same flexibility on board leadership that 97 percent of the S&P 500 now have, while still providing strong independent oversight, is in the best interest of stockholders," Bank of America Senior Vice President Lawrence Grayson told CNBC in an email.
"No company has dug out of a deeper hole since the financial crisis, turned back to health with solid earnings, and accumulated record levels of capital and liquidity—also to the benefit of our shareholders," he said. "The board respectfully recognizes that stockholders hold varying views on this matter, which is why the board committed to putting it to a vote."
In 2009, shareholders passed a rule that said the roles of CEO and chair should be split between two individuals.
In letters sent to the bank on Monday, CalPERS and CalSTRS, two of the America's biggest pension funds, said they support keeping the roles separate.
Mayo said he was not necessarily opposed to a combination of the roles at other banks. He asserted the arrangement is justified at Wells Fargo and JPMorgan Chase because their stock had outperformed Bank of America's and they had provided superior return on investment.
Shares of Bank of America are down 1.2 percent in the past year, while Wells Fargo and JPMorgan are up 0.7 percent and 4.8 percent, respectively.
More than 70 percent of Bank of America currently have a buy or overweight rating on shares of Bank of America, while 25 percent have a hold on the stock.