Are boards at top financial institutions really going to evolve?

You might have thought that shareholders would vent a little more toward the boards of ailing companies, but that really has not come to pass. The proxy season, in fact, was notable for a general lack of anger, except from the activist organizations that raise a stink every year. That said, what can we expect from boards of top companies over the next few years?  

Well, there may be some tinkering, especially at the hardest hit companies. Washington Mutual comes to mind. As does UBS, which wants to beef up the financial intelligence quotient on its board. It has already announced that four of 12 directors will not be back. 

Other boards may want to consider some tinkering, as well. The Financial Times took a look at the boards of eight companies: Citi, JPMorgan Chase, Bank of America, Goldman Sachs, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns. "According to their biographies on the companies' websites, more than two-thirds of the occupants of those board seats had no significant recent experience in the banking business. Fewer than half had any financial services industry experience at all."  

The feeling has long been that the inside directors bring the financial expertise. What the board wants from outside board members are insights and perspectives from outside the industry. But boards, especially key committees, are increasingly being asked to monitor and oversee more technical areas, such as risk management. We may see some more specialists brought on board. But this may be hard in the area of financial services, especially where truly non-conflicted talent expertise is rare. - Jim