October 3rd, 2009

Bank of America’s Board in a conundrum …….Unavoidable or absolute Neglect?

The fact that Bank of America’s Board is scurrying around for a Chief Executive Officer for their company, speaks volumes about the functioning of their Board.


The credit and mortgage crisis has been around for sometime now. The deal with Merrill blew up in Bank of America’s face more than a few months back and it is now that the Board starts looking for a CEO successor?


The Board of Directors at Bank of America has been lacking in a few critical areas besides of course CEO succession planning. Consider for example, that through 2008, members of such a large financial behemoth’s Asset Quality Board Committee included the publisher of a Spanish language newspaper and a retired executive of a telecommunications software company. With the Asset Quality Board Committee required to provide financial and risk oversight including approving credit risk policies as required by the Basel II accord, credit concentrations, credit risk inherent in some products, read mortgage securities) , it is hard to see how these committee members were selected to serve on the Asset Quality committee without relevant experience.


Besides, staffing critical Board committees with members having irrelevant experience, some of the Board members were CEO’s themselves. It is easy to see how succession planning was given the short end of the stick when such CEO board members may have been over extended- managing their own companies while trying to provide strategic oversight to others.


With some Board changes that Bank of America has made in the last few months, shareholders can hopefully expect better oversight.


Just for the record, as per the last proxy statement, the Corporate Governance Board Committee responsible for succession planning, held only 4 meetings during all of 2008. Seems kind of less doesn’t it especially when you consider that Board meetings were held 13 times during 2008? Of course only 2/3rds of all the directors attended these meetings. Quite a sorry figure there….and of course as far as compensation was concerned, directors were nicely rewarded with the lowest any director earned during 2008 hovering around $120,000.




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