Bank of America’s board named a new Chairman this week – former du Pont Chairman and CEO, Charles O. Holliday Jr. Of course, the roles of CEO and Chair of the Board have been separated at Bank of America since shortly after last year’s annual meeting where shareholders loudly voiced their opinion on the issue. In this year’s proxy statement (filed March 17, 2010), the company let us know that a new person would be named Chair in the section addressing the SEC’s new disclosure requirements regarding Board Leadership:
“...we have an independent Chairman of the Board. The current structure is appropriate in response to our stockholders vote in April 2009 to approve a Bylaw amendment providing for an independent Chairman of the Board. After that, the Board, upon the recommendation of the Corporate Governance Committee, appointed independent director Dr. Massey to serve as the Chairman of the Board. Following the Annual Meeting, the Board will, upon the recommendation of the Corporate Governance Committee, appoint an independent Chairman of the Board for the 2010 to 2011 term.”
While some may be concerned that Mr. Holliday does not have a background in the financial services industry, we are not concerned about this because the Board Chair should be more focused on managing and activating the board to guide and monitor management, rather than managing the business. As Bank of America’s Board Chair, he is responsible for ensuring that the board includes people with the appropriate backgrounds - including financial services - but does not need to have industry-specific background himself. More important is the broader experience (e.g., strategic planning at a large company) and leadership style he brings to the board. According to a Wall Street Journal article, Mr. Holliday urged “Mr. Moynihan not to accept a seat on another company's board while he is adjusting to the CEO duties at Bank of America, said one person familiar with the matter.” However, we do find some irony in that statement, because Mr. Holliday is adding his role as Chair of the Bank of America board to his role as Presiding Director at Deere and Company. While this role will surely provide him valuable experience in leading a board as a non-executive director, one wonders how much time he can devote to each role, especially if a crisis or major strategic need were to arise at both companies simultaneously.
Annalisa Barrett - Senior Research Associate
