World's Worst Boards

Gregory Alan Bolcer (
Wed, 14 Apr 1999 08:22:02 -0700

I like this article only because BofA and Sybase
made the top 10. I'd like to see BofA decertified
in California. There was talk they were going to do it
for a while a year or two ago. Nothing ever happened.


Bad Boards, Bad Boards--Whatcha
Gonna Do?

Bank of America

Geoffrey Colvin

BA's board lands on this list as the result of a single
act: voting a truly incomprehensible severance
package for ex-CEO David Coulter. When Hugh
McColl's NationsBank said it was buying
BankAmerica last summer (and taking the BA name),
the two companies faced an inevitable problem in
the fast-consolidating banking business: two CEOs,
but a need for only one. The announced plan was
for McColl to take the job first, being older, and
Coulter to get it when McColl retired. But the merger
deal included exit terms so rich that you had to
wonder how long Coulter would stick around.

Answer: a month. The deal closed Sept. 30, and
within days the company announced a third-quarter
write-off of $372 million on a bad loan the old BA
under Coulter had made to investment company D.E.
Shaw. That wiped out most of the quarter's profits
and torpedoed the stock. A few days later Coulter
announced his resignation, effective Oct. 31. He
took with him 300,000 shares, recently worth about
$19 million, plus what may be the greatest pension
of all time: $5 million a year for life. He's 51.

The mind reels. No board would offer this deal as an
employment contract to a great CEO, yet BA is
giving it as an unemployment contract to a nongreat
CEO. As the combined banks consolidate
operations and lay off workers, exhorting the
survivors to work harder to boost the still-suffering
stock, will any of them fail to wonder why the man
who tanked their shares is getting almost $100,000 a
week to do nothing? Twenty years from now, will a
single worker fail to think about this? BA's directors
didn't solve a problem; they created one, and it isn't
going away.

Part 1.

Part 2.
Advanced Micro Devices

Part 3.

Part 4.
Archer Daniels Midland

Part 5.
Bank of America

Part 6.
Occidental Petroleum

Part 7.

Part 8.
Al Dunlap:
Booted for Being a Shareholder Hero

Part 9.
Four That Escaped Our List of Worst Boards

Vol. 139, No. 8, April 26, 1999