Citigroup’s Independent Lead Director, Alain Belda, and chairman of the nomination and governance committee, confirmed earlier this week that the board is actively seeking new directors with “an emphasis on expertise in finance and investments.” One of the board seats that Citigroup is looking to fill was filled by Charles Prince, the former CEO who resigned late last year after its mortgage-backed securities business lost billlions.
Belda’s statement was posted on the Citigroup website in reaction to questions raised by shareholders, it said.
“You’ll have a bunch of technical experts who are not really very good at communicating with one another.” – Milan Moravec, CEO of Moravec & Assoc.
While seeking directors with such experience may seem like a no brainer, companies in all businesses, not just financial services, can be expected to follow Citigroup’s lead. “The financial people will come to the fore now,” said Milan Moravec, chief executive officer of Moravec & Associates, a management consulting firm that provides expertise on the makeup of boards told CFO.com. “Hopefully they’ll provide a better understanding of the direction companies need to go.” The operative word, though, was “hopefully.” Moravec told CFO.com that he doesn’t really expect such decisions to have much impact. He called Citigroup’s announcement “a knee-jerk reaction.”
Loading a board with financial people, even at a financial-services company, makes for a bad mix, Moravec continued. “You’ll have a bunch of technical experts who are not really very good at communicating with one another or at bringing about the right levels of constructive conflict and differences of opinion,” he said. “They’ll be likely to make the same kinds of poor decisions that were made before.”
In November, Citigroup announced that former treasury chief Robert E. Rubin would serve as chairman of the board. He along with Belda, Richard D. Parsons,, and Franklin A. Thomas were charged with the search process that led to Vikram Pandit being named to succeed Prince in December.