Boston Bank Reorganizes, Focusing on Key Businesses

In a broad management shakeup, Bank of Boston Corp. said Friday it has reorganized the reporting structure for its top executives and replaced the office of the chairman with a new council of senior advisers.

In a telephone interview Friday, chairman Charles K. Gifford said that the reorganization came in response to the July acquisition of BayBanks Inc. and the naming of Henrique de Campos Meirelles as president and chief operating officer.

Mr. Gifford said the new structure would allow the bank to focus greater attention and resources on some important business lines, including retail banking, payments operations, consumer finance, fiduciary activity, and corporate banking.

"It's an organizational response to the integration of BayBanks and Bank of Boston and in response to the businesses we wish to pursue," Mr. Gifford said.

The reorganization, disclosed in a memo to employees Friday, gives former BayBanks chairman William M. Crozier control over retail banking in New England and transfers national consumer credit and lending operations to vice chairman William J. Shea.

Vice chairman Edward A. O'Neal, who previously split responsibility for consumer banking with Mr. Crozier, has been assigned to determine strategy for the bank's national consumer specialty businesses. He was one of the few top executives not named to the new policy council, which will meet weekly and is defined by Mr. Gifford as the "senior decision-making group of the corporation."

In a related move, the bank announced a plan to award stock options to its 22,000 employees.

The options will be granted on Tuesday to employees who have not previously received a stock award in 1996. The number of options will be equivalent to the greater of the following: 10% of base pay divided by Tuesday's closing stock price, or 100 shares - 50 for part-time employees.

Several executives received promotions as part of the reorganization. One, Paul Hogan, was made a vice chairman, responsible for corporate banking. He will be a member of the new policy council, along with Mr. Meirelles, to whom he reports, Mr. Gifford, Mr. Crozier, and the following executives, who have been promoted to executive vice president:

Brad Warner, Mark MacLennan, Lindsey Lawrence, Tom Hollister, Rusty Aertsen; Susannah Swihart, John Mastromarino, and Helen Drinan.

Ms. Swihart will head the corporatewide marketing committee; Mr. Mastromarino, the corporatewide risk management committee; and Ms. Drinan, the human resources committee.

Analysts noted that the reorganization considerably enhances the reponsbilities of Mr. Shea, the vice chairman and chief financial officer. He has taken over many of the former responsibilities of Mr. O'Neal, including consumer credit, national lending, and responsibility for Fidelity Acceptance Corp.

Analysts also said Mr. O'Neal has been left with a vague mission and an uncertain future at the bank.

"It's not really clear what his mandate is," said Lawrence Cohn, a banking analyst with PaineWebber.

"He's obviously gotten more of a project than a long-term staff position," said Sally Pope Davis, a banking analyst with Goldman, Sachs & Co. "If they decide to exit those businesses, where does that leave him?"

Mr. Gifford himself did little to clear up the uncertainty about Mr. O'Neal's future. "He has a very specific project that we're asking him to pursue and what comes from that clearly remains to be seen," Mr. Gifford said. "What happens depends on the recommendations he will make back to me."

Some analysts also cast doubt on the effectiveness of the stock option program. They noted that although Chase Manhattan Corp. and NationsBank Corp. adopted similar stock option award programs for employees in recent years, other banks have been slow to follow suit.

"Merely giving people stock, especially when it's much lower than the fellows at the top of the house, doesn't necessarily create a sense of ownership or change people's behavior," said Marybeth Robb, a compensation analyst with Hewitt Associates in Lincolnshire, Ill.

"There is a real growing interest in having employees more aligned with the goals of the company, but stock options may not be the best way to go about it," she added.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER