ABA Banking Journal - May 2011 - (Page 45)

Board Matters | by steve cocheo More disclosure… more scrutiny Dodd-Frank effects hit relations with all stakeholders Since the Dodd-Frank Act passed banks have been preoccupied with immediate impacts, such as debit interchange. But the law presents an additional challenge: communicating about the multitude of impacts with the bank’s various publics— especially shareholders. D o d d - F r a n k w i l l d r i ve a n increased level of disclosure for public banks, warned Andy Mus, senior vice-president and partner at Marsh Communications, LLC, during ABA’s recent Community Bank Investor Conference. This new atmosphere will draw greater scrutiny by shareholders, activists, media, and other, potentially adversarial, groups. Ultimately, said Mus, “banks will be left on their own to tell their own story. Nobody is going to do it for you.” The perceptions of stakeholders regarding Dodd-Frank will hinge on how well banks do that job. Mus advised focusing on three key Dodd-Frank issues: • Compensation. The message here: “short and simple—yet specific.” Dodd-Frank puts the onus on banks to demonstrate a clear relationship between compensation and financial performance. “An effective way to do this is using milestones,” he said. “Talk about things that management has been able to move forward,” such as reducing nonperforming assets. “Make the conversation about what you are doing, rather than about the compensation itself,” he advised. Regarding Dodd-Frank’s “say on pay” votes, Mus stressed the need to communicate to shareholders the principles that guide the bank’s compensation policies, plus presenting roadmaps for future performance. • Whistleblowers. In Title IX, not only new protections, but also new financial incentives, are provided for whistleblowers. They may receive between 10%-30% of monetary sanctions over $1 million—$100,000 or more. “You don’t want to be learning about something from a reporter instead of a branch manager,” said Mus. Banks must ensure they have a robust employee communications program. And they must reinforce internal reporting channels. • Compliance burdens. One of the greatest uncertainties posed for bank shareholders is the cost of the added regulation. Continual media talk about this often deals in generalities, as many rules remain to be written and finalized, and many unintended consequences continue to be discovered. “You want to give comfort to investors that management is on top of these issues,” said Mus. “If shareholders are comforted, that will go a long way towards alleviating fears.” Compliance issues also lend themselves to a roadmap approach, he said. However, compliance issues involve more than shareholders. The message many customers are receiving is that they face new fees, more fees, and reduced services. Mus advised bankers to be very open with customers about what is going on. “Don’t hide fee changes in the small print,” he warned—and make it clear how fees can be avoided. Mus gave some advice for communications with all target audiences: “Don’t be afraid to say the same thing over and over again. That’s how things get to be understood.” n More at: http://tinyurl.com/boardmus may 2011 | ABA BANKING JOURNAL | 45 http://www.ababj.com/briefing/aba-community-bank-investor-conference-1834.html

Table of Contents for the Digital Edition of ABA Banking Journal - May 2011

ABA Banking Journal - May 2011
Contents
Chairman’s View
Editor’s Column
The Economy
Bank Notes
ABA Community Banking: Getting in on the Prepaid Wave
Pass the Aspirin
Tech Topics
Cover Story: #5 and Feeling Good
Smartphones Alter Banking Landscape
Compliance Clinic
Compliance Inbox
ABA Resources
Surveys & Trends
Board Matters
First Person

ABA Banking Journal - May 2011

https://www.nxtbook.com/naylor/BAKS/BAKS0515
https://www.nxtbook.com/naylor/BAKS/BAKS0415
https://www.nxtbook.com/naylor/BAKS/BAKS0315
https://www.nxtbook.com/naylor/BAKS2/BAKS1014
https://www.nxtbook.com/naylor/BAKS2/BAKS0914
https://www.nxtbook.com/naylor/BAKS2/BAKS0814
https://www.nxtbook.com/naylor/BAKS2/BAKS0714
https://www.nxtbook.com/naylor/BAKS2/BAKS0614
https://www.nxtbook.com/naylor/BAKS2/BAKS0514
https://www.nxtbook.com/naylor/BAKS2/BAKS0414
https://www.nxtbook.com/naylor/BAKS2/BAKS0314
https://www.nxtbook.com/naylor/BAKS2/BAKS0214
https://www.nxtbook.com/naylor/BAKS2/BAKS0114
https://www.nxtbook.com/naylor/BAKS2/BAKS1213
https://www.nxtbook.com/naylor/BAKS2/BAKS1113
https://www.nxtbook.com/naylor/BAKS2/BAKS1013
https://www.nxtbook.com/naylor/BAKS2/BAKS0913
https://www.nxtbook.com/naylor/BAKS2/BAKS0813
https://www.nxtbook.com/naylor/BAKS2/BAKS0713
https://www.nxtbook.com/naylor/BAKS2/BAKS0613
https://www.nxtbook.com/naylor/BAKS2/BAKS0513
https://www.nxtbook.com/naylor/BAKS2/BAKS0413
https://www.nxtbook.com/naylor/BAKS2/BAKS0313
https://www.nxtbook.com/naylor/BAKS2/BAKS0213
https://www.nxtbook.com/naylor/BAKS2/BAKS0113
https://www.nxtbook.com/naylor/BAKS2/BAKS1212
https://www.nxtbook.com/naylor/BAKS2/BAKS1112
https://www.nxtbook.com/naylor/BAKS2/BAKS1012
https://www.nxtbook.com/naylor/BAKS2/BAKS0912
https://www.nxtbook.com/naylor/BAKS2/BAKS0712
https://www.nxtbook.com/naylor/BAKS2/BAKS0612
https://www.nxtbook.com/naylor/BAKS2/BAKS0512
https://www.nxtbook.com/naylor/BAKS2/BAKS0412
https://www.nxtbook.com/naylor/BAKS2/BAKS0312
https://www.nxtbook.com/naylor/BAKS2/BAKS0212
https://www.nxtbook.com/naylor/BAKS2/BAKS0112
https://www.nxtbook.com/naylor/BAKS2/BAKS1211
https://www.nxtbook.com/naylor/BAKS2/BAKS1111
https://www.nxtbook.com/naylor/BAKS2/BAKS1011
https://www.nxtbook.com/naylor/BAKS2/BAKS0911
https://www.nxtbook.com/naylor/BAKS2/BAKS0811
https://www.nxtbook.com/naylor/BAKS2/BAKS0711
https://www.nxtbook.com/naylor/BAKS2/BAKS0611
https://www.nxtbook.com/naylor/BAKS2/BAKS0511
https://www.nxtbook.com/naylor/BAKS2/BAKS0411
https://www.nxtbook.com/naylor/BAKS2/BAKS0311
https://www.nxtbook.com/naylor/BAKS2/BAKS0211
https://www.nxtbook.com/naylor/BAKS2/BAKS0111
https://www.nxtbook.com/naylor/BAKS2/BAKS1210
https://www.nxtbook.com/naylor/BAKS2/BAKS1110
https://www.nxtbook.com/naylor/BAKS2/BAKS1010
https://www.nxtbook.com/naylor/BAKS2/BAKS0910
https://www.nxtbook.com/naylor/BAKS2/BAKS0810
https://www.nxtbookmedia.com