Weak Board Salvage Regional Banks' Chiefs' Misbehalf

How can the chiefs of these banks still be at the helm when leaders like Charles Prince, Stanley O'Neal and Marcel Ospel were shoved out of Citi, Merrill and UBS, respectively? Sure, all three companies lost about half their value in the past year. That's bad. But so has RBS. And the losses inflicted by WaMu and National City on their investors are far more horrific. There are probably a few reasons for the discrepancy over which bosses get the ax. The main reason may be the composition of their respective boards. Unlike the big Wall Street banks, regional institutions tend to draw local executives, who may be more forgiving when it comes to a neighbor's shortcomings. After all, it would be quite uncomfortable to bump into somebody you have just sacked on the local golf course. National City may be a case in point. Its board mainly consists not of global financial heavyweights, but of local worthies. There is the president of a hometown community college, the boss of a paint company based down the street and the head of a restaurant group named Eat'n Park. The situation is a bit better at RBS. But for an institution that has global pretensions, its board is stuffed with a lot of Scots. But it isn't just weak boards that have saved the scalps of provincial-bank bosses. It is up to shareholders to hold directors accountable. Because investment banks tend to pay their employees giant bonuses loaded with restricted stock, they often make up the largest block of shareholders. So when the stock buckles, the blade gets sharpened fast.