Should Brain Moynihan keep his board seat as well as the CEO position at the Bank of America?
Speaking on the Bloomberg Surveillance, Chris Whalen, senior managing director at Kroll Bond Rating Agency, agreed that the current CEO of the BofA, who also has a seat on the board of the same company, should not be keeping both positions.
He believes that there should be the certain hierarchy in each company and that everyone needs to have their own place and do the specific job.
”My view has always been that at larger public companies you should separate the two roles. It is physically impossible for one person to do both jobs, for one thing. And I think, also, you have to remember these are managers by large they are not large shareholders. These are people who are running the company that doesn’t have controlling shareholders almost by definition. They are owned by side funds that declare beneficial ownership, right? So, you need to separate the board role from the guy who runs a business. And the CEO reports to the board. This is why you can’t combine the two.”
Although he agrees that these two positions should be separated completely, he is also aware of the fact that, no matter what the final decision is and how would shareholders vote if they had any influence, the board would still have the final word.
”If the performance of the Bank of America worked better, we wouldn’t be hearing about this. You have this contest between the board and Moynihan and the shareholders, but the reality is even if the shareholders voted unanimously to separate the roles, the board could still do as they like’’
He concluded, at the very end, that the Bank of America, one of the largest financial services companies, still reflects the old regime and that, if he were Brain Moynihan, he would accepted the chairmen.