Bair: ‘Too much is made’ of bank chair, CEO debateThe Honorable Sheila C. Bair
(Yahoo Finance) – A former chief of the Federal Deposit Insurance Corporation says too much emphasis is put on the debate over whether bank chief executives should also be board chairs.
Sheila Bair, who in August became the president of Washington College, tells Yahoo Finance “too much is made of separating these roles,” adding, “it’s really more about the people and whether they are competent and setting the right tone and culture.”
Bair, who led the FDIC through the worst financial crisis since the Great Depression, also notes that in some cases, you could have a “dominant CEO and a weak chair,” which could actually make the situation worse, “as it obfuscates CEO accountability.”
In the latest battle over the chair-CEO role, Bank of America (BAC) CEO Brian Moynihan faces a dispute over whether he should retain his role as chairman of the No. 2 U.S. bank by asset’s board of directors. Shareholders will have the opportunity to weigh in at a special meeting on Sept. 22.
Bair declined to comment specifically on the situation at BofA. However, Glass Lewis, an influential proxy advisor, recommended voting against the proposal that would allow Moynihan to hold on to the chair role, which he was granted in October 2014. Moynihan has been the Charlotte, N.C.-based bank’s chief executive since 2010.
“Glass Lewis believes that the appointment of a chairman of the board who is independent of management is nearly always preferable to having a single individual lead both the board and the executive team,” the company wrote in a note to clients on Wednesday.
The advisory also noted in its view, an independent chair has a greater ability to oversee various executives, and “set a pro-shareholder agenda without being forced to weigh their own interests in relation to those of shareholders when making board decisions.”
Glass Lewis did, however, emphasize that its recommendation to vote against the specific proposal shouldn’t be interpreted as an indication it disapproves of Moynihan’s leadership of the company.
BofA spokesman Lawrence Grayson says “the board recognizes that some have a fixed view on board leadership structure, but (it) believes that it is in the best interest of shareholders to have the same flexibility that nearly all the S&P 500 already have in determining its appropriate leadership structure as circumstances warrant.”
Other big-bank chiefs have also sometimes faced criticism over holding chair roles. For example, JPMorgan Chase (JPM) CEO Jamie Dimon won battles in 2012, and 2013, over his dual positions. He remains at the helm of the biggest U.S. bank and its board to this day.
Certainly, Moynihan and Dimon aren’t alone on the matter, as fellow financial behemoths like Wells Fargo (WFC) and Goldman Sachs (GS) also have CEOs who serve as chairs.