Last week, Bank of America announced the election of four new members to its board of directors. The announcement represents a significant infusion of new boardroom talent into the nation’s second largest bank. However, the question remains whether the move is simply a public relations angle in the wake of continuing scandals in the banking sector, or is it a true sign of commitment by Bank of America that it is dedicated to creating a culture of improved corporate governance.
The announcement of new corporate board members is of course by itself not earth-shattering news. However, when you consider that the move represents a 33 percent increase in the overall number of directors on its board, and comes on the heels of a major overhaul of its board just a few years ago, it is significant news.Here are the four new directors:
- Sharon Allen, former Chair at Deloitte LLP;
- Jack Bovender, former HCA Inc. Chair and Chief Executive Officer;
- Linda Hudson, president and CEO of the U.S. subsidiary of BAE Systems Plc; and
- David Yost, former CEO of AmerisourceBergen Corp.
To be sure, these individuals bring with them significant credentials – three of them run or have run a public company. However, it remains to be seen as to whether they will have a significant impact upon the board. It is possible that this is simply a public relations move – a way for Bank of America to demonstrate to the public that the staleness indicative of other bank boardrooms will not lead to similar scandals (e.g. Barclays, JP Morgan). After all, Bank of America went through a board overhaul in the wake of the financial crisis in 2008, so why go through another one only a few years later?The new directors could be to show the public that the bank has gotten back on its feet and is now able to recruit what some would say are risk-adverse directors.
Many believe that the additions to the Bank of America board are nothing more than the bank’s practical solution to a reality for many public company boards – retirements. Bank of America currently has three board members who are at or near the retirement age of 72 (the bank’s most recent proxy filing indicates that any director age 72 or older should not be nominated for re-election, although the board may allow it if it is in the best interest of the company and the shareholders). So perhaps this is just the bank being pro-active in the face of these upcoming retirements.
Regardless of the motive, the additional directors at Bank of America signal a new era of corporate governance by the bank. An infusion of new talent at the board level is most often times a step in the right direction towards improving shareholder (and in the case of Bank of America), customer confidence.
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