Shareholders: The stock price is down 60% from January 1, 2010 through September 23, 2011 (during Moynihan’s tenure), hitting new lows last week despite the fact that the bank announced new restructuring plans. By comparison, the S&P rose slightly and JPMorgan jpm is down by 30%. And, as mentioned above, a group of shareholders filed a lawsuit related to disclosure issues last week.
Employees: The bank plans to eliminate approximately 30,000 jobs (the size of a small town) as part of its restructuring plans. At the same time, Bank of America continues to hire new employees.
Management: Moynihan has recently removed several top executives and promoted two people to serve as co-chief operating officers, David Darnell to head the consumer division and Tom Montag to lead the commercial division. Montag has worked for both Goldman Sachs GS and Merrill Lynch and received some negative publicity during the Senate’s probe of Goldman. Will the promotion of Montag instill confidence in institutional customers? Do you think they’ll remember Montag’s past?
Customers: During the past year and a half, the bank has been at the center of a foreclosure paperwork nightmare. It ranks low in JD Powers’ ratings of overall satisfaction in retail banking. And a recent MSN Money-IBOPE Zogby customer service survey put Bank of America last with more than 40% of its customers rating its customer service as poor. Less than 1 in 10 surveyed considered the service they received at the bank to be excellent.
Bank of America has placed significant emphasis on customer service, according to a study of 2,160 companies globally by research firm Beyond Philosophy in which Bank of America had the 5th highest number of customer experience executives. But, according to Steven Walden, senior head of research at Beyond Philosophy, despite its staff commitment, Bank of America is perceived to “not provide a great customer experience, with a level of disorganization in terms of the customer experience itself.” This is in contrast to other smaller banks, he says, where the leadership is focused and the banks invest in their staff (like Umqua, Huntington and TD Bank TD).
Although it was reported that Bank of America failed to make a Fannie Mae list of banks with satisfactory servicer ratings, Fannie Mae spokesperson Andy Wilson would not verify whether or not Bank of America had satisfactory scores, saying Fannie Mae was not releasing that information at this time.
These are some of the issues, which have arisen on Moynihan’s watch. The legacy issues of governmental, customer, and shareholder legal actions related to the Merrill Lynch merger and other aspects of the financial crisis should also be taken into consideration.
Putting the ball back in your court, as a Bank of America director, you authorized payment of $10 million in performance-based cash and bonuses in 2010 to Moynihan. For your service as a board member at the bank, you earn between $250,000 to $500,000 or more, depending on your duties and circumstances. And as a director, you do have more information than is publicly available, so who knows? Maybe you’d be patient and wait to let things play out.
On the other hand, after this review, you might convince some of your fellow directors it’s time for more than just cost cutting. Perhaps it’s time for some serious succession planning and coming up with a few assertive ways to shore up the company’s sagging relationships.