Boardroom Conversation with a Bank of America Director

Sitting on the board of a systemically important bank such as Bank of America Corp. is a big responsibility. Lionel Nowell III joined Bank of America’s board in January, 2013, shortly after Brian Moynihan was named CEO. He brought with him financial expertise and experience with some of the world’s largest consumer brands at a time when Bank of America’s reputation with consumers was hurting. He previously was a senior vice president and treasurer at PepsiCo, and also served in executive roles at RJR Nabisco and Pillsbury North America. He talked to Bank Director digital magazine about board governance at Bank of America, and the qualities of an effective director.

How did you end up on a bank board?
When they first approached me, I really had to sit back and think about it. But I believe in the bank. We have to get it right, because it’s good for America; it’s good for our economy. People have to have confidence that they can own a home, own a car, that there is someone they can trust. During the crisis, the banks got tainted and lost a little bit of that.

They lost the consumers’ trust?
Yes they did. With my background with consumer brands, I felt like I could go in and add some value.

You missed a lot of the financial crisis, having come to Bank of America’s board in 2013. Would you have accepted the post if it had come in 2008 or 2009?
I’m not sure I would have. Brian Moynihan had been in place three years, so I had to get comfortable with him and his management team. You have to have confidence in the CEO. The board is not there day to day. I spent time with him more than once, and with the management team, and I spent time with board members. I just wanted to make sure I got a chance to get better acquainted with people I knew I’d be spending a lot of time with if I accepted the position.

What kind of board would you not want to sit on?
I wouldn’t sit on a board where I didn’t have confidence in the management team. Confidence means the CEO is not blocking my access to anyone in the organization. You need to ask questions of anyone. If it’s a strong willed CEO who controls all the communication, I wouldn’t serve on that board.

Bank of America is one of the biggest banks in the nation and has suffered significant regulatory fines and financial troubles and bad press all around. How does being in crisis mode change the obligations of a board member?
The company has worked through most of the legacy issues that arose primarily from the acquisition of Countrywide in 2008, prior to the tenure of the current management team. It is extremely important for board members to help [management] set the strategy. We have to build a bank that is going to endure and not run off the road again, and hopefully, change the perception people have of the bank.

In September, Bank of America shareholders approved, with 63 percent of the vote, the board’s decision to combine the roles of chairman and CEO. What do you think of that?
That issue was all about the board of directors having the flexibility to determine the best board leadership structure for the company for any given point in time. Previously, a separate chairman and CEO was mandated in the company’s by-laws, one of the few public companies to have that fixed structure mandated in the by-laws. The board thought it was better to have the same flexibility as most of the S&P 500 has. We put it to a vote and the shareholders agreed.

What do you think are the qualities that make a highly effective board member?
You need to know when to push and pull back. You need to bring a diversity of perspective to the board at different times when it’s needed. You have to stay independent. It’s good to have consensus around the table but you want that consensus to come from good debate. You have to balance all of that to maintain a good working relationship with the board and management. I have to pick and choose where I dive deep and do it in a way that is constructive. You are there to advocate for the best interests of the shareholder. There are a lot of other constituents and it’s not like you’re not aware of them, but you have to remind yourself that you are there for the shareholder.

What sort of person would you advise not to be on a bank board?
You have to be intellectually curious and detailed. What makes this place tick? How does it work? You have to be willing to not be popular. You have to be tough minded. You have to be strong willed. You’ve also got to make sure you have the time to dedicate to it. Probably in terms of all my boards, I would say the bank board is the most time consuming.

What should directors be asking themselves?
Are you still adding value? That is one sign it’s time to step down: When you reach a point that you don’t feel comfortable challenging the CEO and challenging the strategy, because you’re so close to the CEO. Am I still being a good advocate for the shareholders? Those are things I think about.