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Mayo's Comerica Rant Puts Critical Focus on Soviet-Era Board Members


When Alfred Piergallini joined lender Comerica's (CMA - Get Report) board of directors, the year was 1991. The Soviet Union was collapsing, Arkansas Gov. Bill Clinton was just starting a run for president, and Prince played the MTV Video Music Awards in a cheekless suit made of paisley yellow netting.

A lot has changed since then. And, for corporate-governance firebrand Mike Mayo, Piergallini's continuing tenure as a Comerica director is a symbol of how the Dallas-based bank has failed to keep up with the times.

Mayo, an analyst at brokerage firm CLSA who famously tangled with Citigroup's board during the 2000s, says Comerica's poor performance warrants a board shakeup, management changes, a new strategy, a sale of the entire bank, or all of the above. The matter is especially urgent, he argues, now that oil prices have tumbled to around $40 a barrel, swelling loan defaults in the lender's home state of Texas.

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While Comerica argues that long-serving directors bring deep knowledge of the company and perspective on the vagaries of economic cycles, Mayo says the board has simply become stale. The bank's directors have served an average of 12 years, or 50% higher than the average for U.S. companies. And no new directors have been appointed in eight years -- a yellow flag given at least two recent studies showing stock prices suffer when boards don't get fresh blood.

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"Six of the nine directors have been there for at least 10 years," says Mayo, who plans to travel to Dallas from New York to speak at Comerica's annual shareholder on Tuesday. "This is about as disgruntled of a shareholder base as I've seen among major banks this decade."

Mayo's complaints come amid a growing investor crackdown on so-called entrenched boards, characterized by long-tenured and aging directors. The focus is partly a result of people living and working longer; given a choice, many board members simply hang on to the lucrative part-time gig.

The California Public Employees' Retirement System, or CalPERS, the largest state pension fund at $297 billion, adopted a provision in March calling for companies to evaluate whether directors have lost their independence once they've served more than 12 years. Starting in 2017, the $1.1 trillion firm Legal & General Investment Management a>