A prominent Boston attorney set to take over leadership of the National Association of Corporate Directors’ New England (NACDNE) chapter says banks may have a hard time attracting members to boards of directors in the coming years.

What was once a plum, easy-going position for the local merchant, or a key source of supplemental income for CEOs, is now a time-sucking grind. Sure, board member pay has gone up, but so has the time commitment and the intensity of the work and preparation expected by executives.

And thanks to closer scrutiny by government regulators, investors and the public in general, the stakes have never been higher for bank boards.

In January, R. Robert Popeo, chairman of the board at Boston-based law firm Mintz Levin, will take over the presidency of the NACDNE from William A. Earon, managing director of Coastal Capital Advisors LLC.

Popeo says banks’ boards of directors have to think like tellers.

“The teller mentality,” in which an individual’s drawer must balance at the end of the day, “must prevail across the whole organization,” he said.

Popeo said Sarbanes Oxley and Dodd Frank put an end to the days when bank board membership meant showing up a few times a year, saying “aye” a few times and collecting a few thousand dollars for the trouble.

‘Income Control’

A nationwide survey of 2010 bank director compensation by bankdirector.com found the median annual cash retainer for directors last year was $10,000, up slightly from 2008. The overall median board meeting fee was $600 per meeting in 2010, down about $100 from 2008.

Today, “the preparation is intense,” Popeo said.

And CEOs willing and able to take on a director’s resposibility – at one time key members of bank and other corporate boards – are now hard to come by.

“Banks had CEOs of other institutions on their boards. [But] now, they’re not permitted to serve on more than one [outside] board,” Popeo said. “Companies do not want their CEO out helping solve the problems of other companies. They’d rather have them down in Washington trying to solve problems, and they can’t do it all.”

Without membership on multiple boards as “income control,” CEOs are also more expensive for the companies that do hire them, Popeo said.

On the other hand, “the amount being paid to board members has increased dramatically over what it once was, but the time spent has increased, too,” according to Popeo. Instead of rolling into a meeting unprepared, today’s board members can expect to spend two full days preparing for meetings that involve detailed accounting and risk management responsibilities.

“You’re going to see fewer CEOs serving on bank boards and the boards of other public companies, and that’s too bad. That’s a loss,” Popeo continued. “You’re going to have to put people on those boards that have those skill sets.”

Accounting, risk management and cyber security are top priorities for banks. And in some ways, directors are often ill-prepared to meet those challenges.

“The hackers are well ahead of us and we’re trying to catch up,” Popeo said. “You have to know the kinds of questions to ask and not every director has multiple skills. The world of board service has changed dramatically.”

“Boards are being sued. Individual board members are being sued, and not just for breach of fiduciary duty,” Popeo said. “They’re being sued under securities law in extreme cases. The message of Dodd-Frank is you really have to police yourself.”

Having A Say

Cornelius Hurley, director of Boston University’s Center for Finance, Law & Policy, said though board membership may be more difficult now than it was a generation ago, it’s probably for the best.

“I think directors are more attentive today than they used to be,” Hurley told Banker & Tradesman. “In the old days, you had a lot of dead wood.”

“Boards have been much more up to speed in the last five or 10 years,” agreed Jon Skarin, director of legislative and regulatory policy for the Massachusetts Bankers Association.

Ideally, board members want to serve, and want to contribute some certain expertise to the bank, Skarin said. That makes recruiting a bit easier for banks.

“They’re looking for people with expertise in specific areas, a background in certain issues. Those are positive additions,” Skarin said. “The less you have to train, the more up to speed you are walking in the door, the better.”

Just like the books, banks’ boards are being watched, too.

“Regulators want to see boards that are engaged,” Skarin said.

A board’s responsibility “is to ensure management is assessing enterprise risk appropriately and that they have appropriate policies in place to manage that risk,” said Brian Thompson, president and CEO of Commerce Bank & Trust Co. in Worcester.

“The days of – in some cases it was almost like a club – those days are over,” Thompson said. “You have to have a financial background. The person who runs the drug store can’t be head of the audit committee.”

“The FDIC, the state banking commissioner, the Fed, they have significant requirements that members are engaged and they monitor the bank’s minutes,” Thompson said. “There’s a lot less tolerance today for anything that’s less than satisfactory, and that’s a good thing. If the FDIC is insuring the deposits, it should have a say in how the bank is managed.”