May 2012
May 1, 2012
Benched by the Board
The board, CEO, and president add personality to collections of mission, motivation, and money that we call “corporations.” PNC, a very successful banking corporation grown from Pittsburgh Trust and Savings, was originally housed a couple of blocks from where I live. I should mention that PNC is not purely a “Pittsburgh” entity: the Trust became Pittsburgh National Bank, which remained for some years before merging with another PNB, of Philadelphia origins. PNB embodied one of the few relations that residents of either of the estranged Pennsylvania cities would want to acknowledge.
The mission of PNC’s board and relaxed interstate banking laws drove its growth into many other states, some of which don’t even have a “p” in them, like Ohio, home state of its CEO and president, Jim Rohr. I don’t hold it against Rohr that he started out as a Cleveland Brown’s fan. That may be part of what motivates him to greater things. Now a Steeler fan, he’s obviously moved in the proper direction. Rooting for the Browns in Pittsburgh is like being a Republican in Chicago politics: it conveys hopeless aspirations to the rest of us. I don’t think that’s just a Pittsburgh thing, but I admit my bias.
Because of my affinity for college football, I identify Rohr by the fact that during his freshman year at Notre Dame, his soon-to-be alma mater won the national championship. That was 1966. I don’t know Rohr’s interest level in football before that year, but he has certainly become fanatic about it, hoping his alma mater wins again before he retires. The last time they did was 1988. Rohr has been at the helm of PNC for years now. Being a great Steeler fan may have permeated Rohr, explaining the intensity he possesses in the banking arena, having been honored as “Banker of the Year.” From all accounts, PNC is one of the best-run banks in the country.
Apparent from my blog topics, my interests extend beyond football and even basketball—at least during the off-seasons, during half-time and commercials of televised games. On Sunday mornings, I enjoy the a.m. talk shows, but fume about the D.C. Beltway parochialism. During some breaks, I consider the shameless ineptitude of Congress, the rising food, gas, and healthcare costs that Congress ignores to the point of denial. Corporate board membership, akin to other exclusive clubs, is another paradox to me. Because of proximity and financial deposits, PNC is my case in point.
I haven’t seen Rohr in the past five years, but during one encounter, I suggested my joining PNC’s Board. Most of us caricaturize “the banker” based on It’s a wonderful Life, but Rohr is a likeable guy, more than you could say for most bank executives. His response to my offer of board service, however, was a look of complete disdain. He never took my suggestion, even though I offered my services gratis.
My motive for offering to serve surpasses joining ranks of elite members: the honor is based on representing people in my income tax bracket. I may share motivation, but certainly not the income tax bracket of typical board members with names like Ford, Rockefeller, or Rothschild. Representation is my sole and critical motivation. In fact, most of any payment given to me would be directed to my alma mater, the University of Pittsburgh. Maybe that nixed any consideration for my offer to serve at PNC.
Banks used to be small town features, local and personal. Your bank was like the local corner drug stores that had a soda fountain where ice cream sodas were served as you sat on stools across from the soda jerk, a title of no disparagement. In the days when sodas were made of more natural ingredients than chemicals, banks were stable and friendly: you knew the teller, who might be your neighbor. Progress improved some things, but not everything changed for the better. America lost some characteristics I miss. Back then, no one had reason to doubt banking practices. Banking mergers destroyed that local persona.
In 1982 I moved to an apartment in downtown Pittsburgh, as the core of our city is known. Living in an apartment, I think one becomes more aware of all sorts of fees. I never bothered to check the bank statements for fees and I don’t use an ATM. Fees tend to creep into your statement when you use an ATM, I’m told. Several notable patriots, including Mark Twain, pointed out that banks don’t play fair. Imagine if Twain had witnessed Wall Street’s antics: his choice words would resound and sting.
Corporate boards of directors, including those of banks, operate in a way that reminds me of the mob – except, of course, boards are legal. The shared rule: take care of your friends. That sounds simple, but permeates from top to bottom. An example of the take-care-of-friends rule is obvious when a CEO gets fired. Of course the focus for him and the board is the bottom line, the stock’s closing price. But where’s the logic in a send-off package, usually consisting of millions of dollars? And for the non-elite employees: I’d question layoffs while profits continue running high. I understand that the human cashiers are held responsible for balancing to the penny, but the banking ATMs don’t need to balance—and they don’t deal down to the cent, at least not in cash. Where’s the revolution?
One practice that rubs me the wrong way is the fact that members of one board of trustees sits on another corporate board, and executives among them rotate and probably get well-paid for the service. College presidents sit on the board of trustees, and the group of corporate board members is an elite pool shared across many businesses. One needs to know very little about education to be on a college board of trustees if one is also on boards of several large corporations. It’s a bunch of friends scratching each other’s backs. And the little guy isn’t in the circle.
So what exactly are the qualifications to serve on a board? Surely one needs a college degree. But earning a degree is not the same as learning from life experience. Getting on a board is more akin to getting on the city payroll: you’ve got to know someone, to be part of the club. If you’re not in, you’re not getting in.
Corporate board membership has some elusive, unspoken but not subtle requirements. Elusive for most of us, that is. In my mind, it is a privilege to serve on a board, but most of the elite members assume their inclusion. I guess that evolved from the fact that corporate interests were owned by wealthy families. Possessing an MBA isn’t a requirement of board membership. As non-person financial entities, corporations entirely lack real-world experience. For a bank, depositors’ interest is paramount. Despite words of customer focus, personal advocacy is only a slogan for most corporations.
If I were selecting members for a board of directors, I would exert my preference for varied perspective as I’ve expressed in my rails against political and celebrity inbreeding, from the Senate to talk shows. My definition of diversity includes someone who works with his hands, representing the aspect of intelligence separate from academic grades and independence of social or economic connections. The problem finding those representatives relates to loss of the previously abundant skilled laborers. Laborers now are made invisible as the middle class disappears along with veritable diversity.
Beyond a different angle of knowledge and wisdom, working folks bring the wisdom of understanding the importance of simple things such as fees on the bank lacking in statement. Be assured there’s nobody like that on your bank’s board. I never looked at the list of fees when I got my statements, but I’ve heard too many anecdotes of charges for something you don’t really want or even recognize. Watch out for yourself: including insidious fees in your bank and charge statements.
My conclusion: corporate boards, like the U.S. Congress, aren’t going to change. The little guy hasn’t a chance of being represented. The loss of small-town businesses, mom-and-pop stores, and local institutions are gone as American landmarks. No matter where we live in this great country, there’s a lot of truth in the reflection, "Toto, I've a feeling we're not in Kansas anymore."
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Next post: June 1, 2012
© 2012 Beano Cook
