Date: April 12, 2011
Company: Bank of America
CEO: Brian Moynihan
Synopsis: Bank of America Corp.’s internal auditors are reviewing why two top finance and accounting executives weren’t consulted before the bank disclosed to investors that a dividend increase had been rejected by regulators, according to people familiar with the situation. Chief Executive Brian Moynihan complied federal guidelines. But there are serious questions about the lack of communication. It highlights questions about Moynihan’s management style, and how decisions are made at Bank of America.
Brand Bubble: Board Chair Chad Holliday is standing behind Moynihan publicly but the WSJ reports governance specialists say it is unusual for a public company to file without consulting top finance and accounting people. Proposed dividend increases goes to the “heart of what they do.”
On the plus side, Moynihan has reportedly asked for an internal review. On the downside, he hasn’t been true to his word. According to the WSJ he pledged to U.S. regulators that he would seek consensus among bank executives to improve the company’s decision making. To an outside observer it looks like the same ol’ same ol. It isn’t easy to change your stripes, but this seems like a big, obvious example of the more things stay the same, the more they stay the same.
Advice: Moynihan shouldn’t wait for the end of this review to take a new approach and get some outside help realigning his style and the way the top management team works together. He has been known, according to the published report, to say “this is the way,” and, “it shall be done.”
Now he has a chance to rescue his reputation and turn this embarrassment into a catalyst for change. Build a team of executives who you trust, create a shared set of values, learn to communicate with each other and protect the CEO brand as well as the bank’s long term reputation.