Last week’s executive shakeup at Bank of America leaves Charlotte with one less top lieutenant for CEO Brian Moynihan, who has fewer direct reports in the city than when he took over the bank five years ago.
In January 2010, more than half of the bank’s 11 highest-ranking executives, including Moynihan, worked in Charlotte. After Chief Financial Officer Bruce Thompson leaves his post Saturday, just over one-third of the 14 top executives will be based here.
It’s part of a gradual change that began before Moynihan. But it’s the kind of news that tends to reignite long-running concerns in Charlotte about the hometown bank’s center of gravity shifting away from the city.
“Home is where the heart is, and if their home is in New York or Boston, that’s where their personal interests lie,” said Carroll Gray, former Charlotte Chamber president. “Long term, that’s a concern for those who have prided themselves on the number of Fortune 500 companies headquartered here.”
Moynihan has repeatedly said the bank has no plans to move its headquarters. In an interview with the Observer this week, Cathy Bessant, a direct report based in Charlotte, made that point emphatically.
“I don’t think I can be any more clear: Charlotte is our headquarters,” she said. “There is not a plan, or a consideration, or even a discussion about moving the headquarters. ... Just hearing the discussion and staying calm requires me to go to a Zen place that is actually not natural for me.”
Bessant, chief operations and technology officer, said the bank’s Charlotte employment has held steady at about 15,000 even as its overall employment has shrunk in recent years. At the end of June, the bank had 216,679 employees worldwide, a decline of more than 71,000 compared with 2010’s level.
After last week’s management reshuffling, two of Moynihan’s five lieutenants with “chief” in their titles have their main offices in Charlotte, Bessant said. Before, Thompson was the only one of five such executives based in the city.
“It is easy to focus on Brian’s direct reports, but if you look at our top leaders across the company, Charlotte has 1,200 of our top leaders, making it the biggest hub for our senior leadership team,” Bessant said.
But others say fears that the bank will leave Charlotte one day aren’t helped by the loss of more top brass from the city. Such fears have been elevated since Moynihan, who has continued to live in Boston but work in Charlotte, was made CEO.
The bank’s head of investment banking and trading, Tom Montag, considered by some analysts the most likely successor to Moynihan, is based in New York, where the bank has a major office tower.
Fleet veterans gaining power
The bank announced last week its new chief financial officer, Paul Donofrio, will be stationed in New York. That leaves Charlotte with five top executives, with the other nine in Boston, Florida and New York. When Moynihan took over, Charlotte had six, with five in Boston, California and New York.
Last week’s moves highlight another trend under Moynihan: his tendency to give more power to executives with ties to FleetBoston Financial, his former employer that Bank of America acquired in 2004.
Moynihan’s first crop of direct reports included only one former Fleet executive, marketing officer Anne Finucane.
Now, four of his direct reports have ties to Fleet.
In a memo last week to employees announcing Thompson’s departure, Moynihan also said Finucane has recently been given additional responsibilities over corporate governance matters. That’s a critical area right now for the bank, in light of its controversial move last year to make Moynihan chairman.
A person familiar with the matter said the elevation of former Fleet executives reflects the ongoing influence of former Fleet directors on the current Bank of America board.
Former Fleet CEO Chad Gifford and Eversource Energy CEO Thomas May were strong supporters of hiring Moynihan and remain key backers, the person said. Gifford and May are now the longest-serving directors on the board, with all other directors joining since the Fleet deal.
Leaders spread out
Bank of America’s leadership had started becoming more spread out under Moynihan’s predecessor, Ken Lewis, with key businesses being run out of New York, California and Delaware.
But a core group of executives remained stationed in Charlotte, bumping into each other during lunch in the executive dining room and frequently discussing issues face to face in their offices at the end of the day.
Marc Oken, who worked as chief financial officer under Lewis and served as principal financial executive under former CEO Hugh McColl Jr., said the direct reports of those two leaders generally lived and worked in Charlotte – “with the possible exception, at various times I’m sure, the head of global finance may have lived in New York.”
To be sure, for massive companies such as Bank of America, it’s not unusual for management teams to be scattered across the country or the globe. For example, John Stumpf, CEO of Wells Fargo, has direct reports in Minneapolis and Charlotte, as well as in the lender’s home state of California.
Bessant said today’s technology, such as teleconferencing, allows executives at global companies to be “out in the field doing their jobs where the jobs happen” but still “keep the feeling of a co-located management team.”
Moynihan holds meetings at least once a week, usually on Mondays, with his management team, she said. If a member of the team cannot attend in person because they are conducting business in one of the bank’s markets, then that person will participate over the phone or video conference, Bessant said.
Bessant, who works on the same floor as Moynihan at Bank of America’s headquarters on Trade and Tryon streets, said she gets face time with him, but the amount can vary depending on the week. On Thursday, she said she had spoken to Moynihan every day so far that week, three of the four days in person.
“This is not a group that believes in management by ivory tower,” she said.
More of the bank’s leaders being based in other cities has meant key decisions aren’t just made in Charlotte anymore. Bessant said the bank’s executives make decisions everywhere as they travel around the world.
“I was in New York for two days this week, so if I made a decision, would you say I made it in New York?” she said.
Bessant oversees a Charlotte-based unit that decides how to spend $3 billion a year on the bank’s investments in technology. Her unit is also responsible for information security, and the bank’s chief information security officer is based in Charlotte.
But other operations have shifted in recent years. The bank has relocated hundreds of investment bankers and traders – jobs that can pay six-figure bonuses – to New York. That has left fewer employees on the bank’s trading floor in uptown Charlotte’s Hearst Tower as a result of the bank’s acquisition of Merrill Lynch in 2009.
Bank of America is not the only big bank whose CEO is in one city and its headquarters in another. Detroit-based Ally Financial is run by CEO Jeffrey Brown, who lives and works in Charlotte.
But Charles Elson, a professor of corporate governance at the University of Delaware, says it’s unusual for a large U.S. corporation to have its CEO and CFO in different cities.
“Typically, all senior personnel are in the same headquarters,” he said. “It’s not unprecedented. But it doesn’t happen particularly often because of the close interaction between the two.”
Worries about community impact
Any talk about Charlotte losing high-ranking Bank of America leaders raises concerns about the blows it could deal to Charlotte in terms of civic involvement.
“Fewer direct reports in Charlotte means fewer big dogs there, and these execs are the ones with the big six-figure salaries who will always take care of home first in terms of charitable giving, community involvement, university support, etc.,” said Ken Thomas, a Miami-based banking consultant.
Bank of America says its annual charitable donations in the Charlotte region have remained at about $15 million since 2007. That figure does not include other investments the bank has made in the city, such as paying millions for the naming rights to the Panthers’ stadium. Bank of America execs also point out that one of Moynihan’s direct reports, Andrea Smith, will serve as chair of the Charlotte Chamber in 2017.
Charles Bowman, the bank’s president over the Charlotte-area market, said he can’t recall when there’s been a “broader base” of Bank of America employees involved in the local community.
“It’s hard for me to imagine anyone else in town, corporately or otherwise, who’s any more committed or engaged in what’s going on in Charlotte,” he said.
But Gray, the former Charlotte Chamber president, says the shrinking number of the bank’s highest-ranking executives in Charlotte brings concerns about less civic involvement.
“(Moynihan has) participated in various activities in Charlotte since he’s been CEO,” Gray said. “But he has not had the presence, the personal involvement (in the community) that McColl had,” Gray said.
Bessant said any worries about the bank’s commitment to its headquarters city are misplaced: “We want Charlotte to feel as proud and confident about Bank of America, as Bank of America feels about Charlotte.”
Retail or investment bank?
At least one analyst is predicting Bank of America may pull up stakes from Charlotte one day.
Dick Bove, who has followed Bank of America for about 30 years, says there’s a “high possibility” the lender will move its headquarters to New York or Boston in the next four to five years.
The decision, Bove said, will hinge on whichever grows the fastest in the coming years: retail banking or investment banking.
“Is it going to be a national retail bank with a dominant position in multiple consumer products, or is it going to be an investment-banking company with an overseas orientation which is funded by this retail bank?” Bove said.
“If it’s going to be a retail bank, then it stays in Charlotte. If it’s going to be an investment banking company with an overseas orientation, it goes to New York or Boston.” Staff writer Rick Rothacker contributed.