Bofa A board of directors of Shuffle Ode to shareholders

 

Wednesday, Jun 24,2009, 11:51:35 AM   Click:

Bank of America (BAC: NYSE) is listening to its shareholders.

In the two months that have elapsed since the annual meeting of the Bofa, the company reversed a six-member board of directors. The latest arrivals were quietly announced late Friday evening in a filing with the Securities and Exchange Commission.

First, the Board of Directors Chairman and CEO Ken Lewis stripped, president of its title, something shareholders supported in a non-binding vote. Then he ousted more than six directors, some of which were the least popular among the shareholders, according to the vote, and have been targeted by activist campaigns.

The most recent departures consisted of two directors with a great army resumed, but little apparent experience in banking, regulation, or service on the boards of public enterprises to all retirees, the high-profile army General Tommy Franks, who led the attacks against the Taliban after the Sept. 11, 2001, and retired Admiral Joseph Prueher, a former United States Ambassador to China.

Walter Massey, who was replaced as president of Lewis, is likely to depart in less than a year, as it relates to the compulsory retirement age of 72. In the meantime, he charged forward with a board restructuring plan that seems very promising. A study by Massey led to the appointment of four new directors earlier this month, all of whom have significant experience in banking or banking regulations.


Admittedly, Bofa of the Board of Directors today looks like it should have, before the crisis develops.

Some are veterans who have a long history with the Bank of America, including Lewis and Massey, and former President Charles Gifford. Other honed their chops in the financial world outside Bofa, if Frank Bramble, the former CEO of MBNA, the giant credit card Bofa acquired in 2005, Charles Rossotti, a senior adviser to the central Private Equity The Carlyle Group, Gary Countryman, chairman emeritus and director of Liberty Mutual, or additions William Boardman, former head of Bank One and Visa (V: NYSE), and D. Paul Jones, former CEO of Compass BANCSHARES.

Fresh blood on the card also includes links to regulatory agencies, like Susan Bies, a former governor of the Federal Reserve, and Donald Powell, former chairman of the Federal Deposit Insurance Corp.

Few other directors have made their names as leaders in the business world outside of the bank, such as Thomas Ryan, who is chairman, president and CEO of CVS Caremark (CVS: NYSE) and Virgis Colbert, who was a leader and is now a senior adviser MillerCoors.

Experts in corporate governance and executive recruitment say the wave of change appears to be a positive experience from the outside, but time will tell its final results.

Jim Westphal, an expert in strategic management at the University of Michigan, who studied the composition of the board, says it is important for Bofa of the Board to have a good mix of professionals with experience in the banking sector, regulation and business. It is a difficult task for any company, especially one as large and complex as Bank of America.

"They are really complex processing tasks difficult," he says. "It is very easy to get rid of directors as the Franks, but it is much more difficult to find someone who is more qualified."

Other directors who have left the company since April 29 vote the least popular director O. Temple Sloan, against which 37.4% of shareholders voted, and Jackie Ward, against which 28.2% of shareholders voted. Activist groups have long charged that the directors and heads of key committees, the two directors should have anticipated problems with the acquisition of Merrill Lynch.

Robert Tillman and Patricia Mitchell has also resigned.

After netting two directors, the board now has 16 members of the organization within the range set by Bofa its statutes - from 5 to 30 members - but slightly smaller than the Board of Directors Most major banks, which is about 18 to 20 members, "said Westphal.

Bofa that will add a new administration is unclear, as is who will replace Massey as president once he leaves.

Pete Deragon, who runs financial services, the practice of recruiting businesses Stanton Chase, notes the "public pressure" for the board of financial services experience. He cites criticism of Citigroup ( C: NYSE) CEO Vikram Pandit - deserved or not - have extensive experience in investment banking, but not in the main retail banking.

Other qualities are difficult to measure, but equally important - if gut instinct that could have limited exposure to the housing market implosion, good risk management skills to avoid the complex derivatives that competitors have been jumping, or personal relationships. Few candidates from the list of cocktails they attend in their curriculum vitae.

"Personal relationships between regulators and government officials and bank executives are very important," Deragon said. "You can imagine if Hank Paulson was not a guy on Wall Street, then called the nine Banks in Washington and said: "This is what we will do. This bank will go bankrupt. The bank stay in business. And you will sign it. "

Paulson's alma mater of Wall Street, Goldman Sachs (GS: NYSE), has been criticized - to be announced, depending on your point of view - for its close ties with Washington in the middle of the financial crisis, the benefits of rescue and regulatory review.


While Massey is able to obtain the right mix and number of professionals, another factor that May be overlooked, says Westphal, is how they work together. May it take some time for the new board to be effective, even if it has the right combination of professionals.

B. Espen Eckbo, un expert en gouvernance d'entreprise de Dartmouth College Tuck School of Business, note également que, si les conseils sont censés fournir des freins et de contrepoids contre la direction, il ya souvent un manque d'indépendance, même parmi les administrateurs who have never worked for the institution. Bofa of the Board of Directors has the reputation of being an old boys network of supporters Lewis, who was standing behind the CEO Embattled well as the shareholders yelled to his ouster.

"Perhaps it is time to depart from the old model, a little, which reduces the research to current and former leaders of other similar companies," said Eckbo. "In fact, it is likely that other types of candidates in May exhibit strong independence - for example in May a military commander. "

May His argument has some merit. Curiously, Gen. Franks was the director's more popular among shareholders, the approval of 93.4% in the vote.