When the U.S. government took large stakes in a number of troubled companies, government officials stressed that they would not push bureaucrats onto those boards. But that hasn’t stopped Treasury officials from taking an unprecedented—though behind-the-scenes—role in recasting the boards of companies that have participated in the Troubled Asset Relief Program (TARP). Recipients such as Citigroup, AIG, and Bank of America have experienced pressure to make changes. “There’s a whole dance between the government, boards, and the public,” says Anne Simmons, co-founder and CEO of Board Advisory Services. “And no one is going to want to talk openly.”
Many TARP recipients are now scrambling to pay back their share of the $700 billion bailout to escape further government meddling. Some banks are believed to be under an undisclosed regulatory sanction that requires them to revamp their boards and focus on risk and liquidity management. Since Bank of America signed on to TARP, four directors have resigned from its board and been replaced, likely with government input.
Recently, Citigroup reshuffled its senior executives, including the removal of CFO Edward Kelly—changes made while under pressure from the Treasury and after discussions between regulators and Citigroup Chairman Richard Parsons. Citi’s chief accountant, John Gerspach, is now the bank’s fifth CFO in five years. Citi also replaced four members of its board since signing on to TARP. Only three of AIG’s original 11-member board remain in place.
“You can at least see an attempt to make government regulators happier,” reflects Jaidev Iyer, managing director of the Global Association of Risk Professionals. “But there is a difference between making changes to appease regulators and making fundamental changes to your board and governance practices.”
“The government is working behind the scenes—but they will get their money back,” assures Simmons, who believes many of the casualties of the financial crisis will need to revamp their boards whether the government says to or not. Says Simmons: “The market is going to demand it.”
Chrysler named five new directors to its board: George F. J. Gosbee, chairman and president of Tristone Capital; Douglas Steenland, former CEO of Northwest Airlines; Scott Stuart, a founding partner of Sageview Capital; Ronald L. Thompson, chairman of the board of trustees for Teachers Insurance and Annuity Association; and Stephen Wolf, chairman of R.R. Donnelley & Sons.
American International Group’s annual meeting resulted in the re-election of Dennis Dammerman, former vice chairman of the board of General Electric; George Miles, CEO of WQED Multimedia; Suzanne Nora Johnson, former vice chairman of Goldman Sachs; and Morris Offit, chairman of Offit Capital Advisors. Liddy said he will step down as CEO as soon as a replacement is found.
Ken C. Hicks has been named Foot Locker’s new CEO. Hicks will succeed Matthew D. Serra, who has been the company’s CEO since March 2001. Serra will continue as the company’s chairman until his planned retirement next year.
Trex Company named Richard E. Posey to its board. Posey has served as chief executive of Moen Inc., a faucet manufacturer, and Hamilton Beach/Proctor Silex.
Bank of America revamped its board by electing four new directors: Susan Bies, William Boardman, Paul Jones, and Donald Powell. Bies previously served on the SEC’s advisory committee. Boardman served as chairman of Visa International until his retirement in 2005. Jones is currently an attorney at law firm Balch & Bingham. Powell is a director of Stone Energy.
Biogen Idec confirmed two of billionaire activist Carl Icahn’s picks to its board: Richard Mulligan, a professor of genetics at Harvard Medical School and director of the Harvard Gene Therapy Initiative; and Alex Denner, a managing director at Icahn Partners.
Jeff Huber, senior vice president of engineering at Google, has joined Electronic Arts’ board. Huber was in charge of technology development for Google’s AdWords and AdSense, as well as Google Apps. Prior to Google, he served in a number of management roles at eBay and Excite@Home.
David L. Calhoun has been named to Boeing’s board. Calhoun is CEO of The Nielsen Company. Prior to his work at Nielsen, Calhoun spent more than 25 years at General Electric.
Sonoa Systems named Tsvi Gal to its board. Gal is a general partner at Exigen Capital and previously served as Deutsche Bank’s Investment Bank and Assessment Management’s CTO.
Anne Egger has been appointed to Optical Sciences’ board. Egger has been working with Electro-Optic Sciences as a consultant since her retirement earlier this year.
Michael Gelmon and Cory Gelmon have been named to Safeguard Security Holdings’ board. Michael Gelmon has replaced Tom Montgomery as chairman of the firm and Cory Gelmon has been elected director and appointed new CFO.
Best Buy’s Brad Anderson will retire as the company’s CEO. Brian Dunn is believed to be Anderson’s successor. Dunn currently serves as the company’s president and COO.
E*Trade Financial named Kenneth C. Griffin, founder and CEO of Citadel Investment, to its board. Griffin currently sits on the Advisory Council for Chicago 2016, working to bring the 2016 Olympic Games to the Windy City.
George E. Minnich has been appointed to Kaman’s board. Minnich retired as senior vice president and CFO of ITT in 2007.
MarineMax appointed Russell J. Knittel to its board. Knittel has been executive vice president of Synaptics since 2007, and CFO since 2001.
Ray Powers has been appointed to MediaG3’s board. He served as COO and executive vice president of International Communications, a wholesale carrier that owned nearly 460 wireless transmission sites in the U.S.
Robert Half International appointed Barbara J. Novogradac to its board. Novogradac is currently president of Novogradac Investment Company, a private real estate investment company.
FedEx elected Susan C. Schwab, U.S. Trade Representative from 2006 to 2009, to its board. Schwab is currently a professor at the University of Maryland’s School of Public Policy.
Qualys CEO Philippe Courtot has been elected to Tech-America’s board. Courtot served on the board of the Cyber Security Industry Alliance (CSIA). He previously was chairman and CEO of Signio, an electronic payment start-up that he repositioned to become a significant e-commerce player.
James K. Brewington has been named to Sonus Network’s board. Brewington retired as president of Developing Markets at Lucent Technologies in 2007.
Boston Scientific CEO James Tobin will leave the medical-device maker. Tobin will be succeeded by Raymond Elliott, the former CEO of orthopedics maker Zimmer Holdings.
ScanSafe, a provider of Software as a Service web security, appointed Bernard Liautaud to its board. Liautaud was founder and CEO of Business Objects, an enterprise software company.
John McCartney was elected to Covance’s board. McCartney currently serves as chairman of the board of A.M. Castle, a provider of products, services, and supply chain solutions. McCartney previously served as president and COO of U.S. Robotics.
George E. Minnich has been named to Kaman’s board. He retired as chief financial officer from ITT in 2007.