Bank of America Corp (BAC.N), the second-largest U.S. bank, is remaking its board with four new directors in anticipation of coming retirements next year.
The bank is adding current and former corporate executives from outside the financial sector in a sign the bank can draw high-profile board members despite its ongoing challenges, one expert said. It's the latest corporate governance shake-up at a bank that foundered during the financial crisis and in 2009 overhauled its board under government pressure.
The new directors are Sharon Allen, former Deloitte LLP chairman; Jack Bovender, former HCA Inc (HCA.N) chairman and chief executive; Linda Hudson, president and CEO of the U.S. subsidiary of BAE Systems Plc (BAES.L); and David Yost, former CEO of AmerisourceBergen Corp (ABC.N), the bank said in a statement Thursday.
Bank spokesman Scott Silvestri declined to comment on who is due to leave the board, which will have 16 members with the additions. But the board has three directors who are older than or near the bank's typical retirement age for directors.
The bank's most recent proxy filing says a director who has reached the age of 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 shareholders.
This year, the board nominated 72-year-old Virgis Colbert, a senior adviser at brewer MillerCoors (TAP.N), for re-election, and he was approved by shareholders. Two other directors, former Federal Deposit Insurance Corp Chairman Donald Powell and Carlyle Group (CG.O) senior adviser Charles Rossotti, are 71, according to the bank's website.
Director Paul Jones retired from the board in May.
In May 2009, Bank of America announced plans to add more directors with financial expertise and banking experience as the bank reeled from its Merrill Lynch acquisition and faced a capital shortfall of $33.9 billion after a government stress test. In the next few months, the bank added six new directors, while other board members stepped down.
If Powell departs, only three of the six directors added in the latter half of 2009 will remain. Former Bank One executive Bill Boardman retired in the spring of 2011. Jones, former chief executive of Compass Bancshares Inc, was also a 2009 appointee.
Rossotti and Colbert are former Merrill directors who were named to the board in January 2009 after the acquisition closed.
The four new directors join the board of a company that has lagged its peers in recovering from the financial crisis largely due to losses and lawsuits tied to its 2008 acquisition of subprime mortgage lender Countrywide Financial. Chief Executive Officer Brian Moynihan has been building capital by selling assets and cutting costs, but faces questions about how he will grow earnings.
The new directors are typical corporate board members who differ from the bankers and former regulators who were added to the board in 2009 under government pressure, said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.
"It's a sign that the bank is getting its bearings back," Elson said. "They are able to attract risk-averse retired or current executives."
A source familiar with the board who did not want his name used said new blood was a positive, especially operations-oriented directors at a company that faces questions about its future performance.
Silvestri, the bank spokesman, declined to comment on whether regulators approved the selection of the bank's directors. Spokesperson for the Fed and the Office of the Comptroller of the Currency could not immediately be reached for comment.
The board has not determined board committees for the new directors, the bank said in a securities filing on Thursday. The directors will receive pro-rated stock and cash awards on September 1, according to the filing. Non-employee director compensation includes $80,000 in cash and $160,000 in restricted stock awards, according to the bank's most recent proxy.
Rossotti, Colbert and Powell did not return calls seeking comment. Board chairman Chad Holiday also did not return a call seeking comment.
(Reporting by David Henry in New York and Rick Rothacker in Charlotte, North Carolina; Editing by Dale Hudson, Bernard Orr)