Interview With Herman E. Bulls

February 2023

Chris Clark conducts interviews with leading corporate directors and subject matter experts for Stuart Levine & Associates, a global consulting and leadership development company. The Planet Governance™ interview series features the views of corporate directors, chief executives, and governance experts on timely issues from succession planning, board refreshment, and board composition to cyber-resiliency to stakeholder activism.

This highly engaged corporate director says board refreshment is an art and a science…

Herman Bulls is Vice Chairman, Americas, JLL, Inc., as well as an International Director and the founder of JLL’s Public Institutions Business Unit. During more than 33 years at JLL, Mr. Bulls has worked in the areas of development, investment management, asset management, facilities operations, and business development. Mr. Bulls co-founded and served as President and CEO of Bulls Capital Partners, a multi-family financing company. Prior to joining JLL, Mr. Bulls completed almost 12 years of active-duty service with the United States Army.

His directorships include Vice Chairman, USAA; Chairman, Fluence Energy; Director, Host Hotels; Director, Comfort Systems; Director, Collegis; Board of Governors, American Red Cross; Director, West Point Association of Graduates; and Member Defense Policy Board, U.S. Department of Defense.

Herman E. Bulls

Chris: Herman, thank you for joining me this morning. Why have traditional board refreshment methods been relatively unsuccessful?

Herman: Chris, first, thank you so much for selecting me to be part of Planet Governance. To be honest with you, I am very humbled having known you originally at NACD where you did a fantastic job.

Board refreshment is an important subject, and it has become even more important over the last five years as the call for procuring diversity has intensified.

Boards have traditionally been comprised of primarily white males. Regarding the critical nature of diversity, let’s start with this homogeneous environment and the organization that you’re leading has markets that are made up of the world, which is not homogeneous. It’s obvious then, that the leadership of these organizations and therefore their boards, need to have a diverse perspective.

About 15 years ago, it was a majority of white male executives that were in key leadership positions at top public, private, and not-for-profit organizations. Cognizant of all the constituent voices and the parameters of the new capitalism, leading directors now carefully consider the views of shareholders, the employees, the suppliers, and the communities in which they operate.

The key questions: how are we getting the input that we need to be valuable, and how are we adding value to the organization? In turn, we start looking at the board for their experience and expertise, and this brings board refreshment to the forefront.

Some of the board refreshment mechanisms that are used have been age limits, i.e., age 72 as a fulcrum for departing the board… and it is creeping up to age 75. Also, term limits are another less popular mechanism.

I tell you, Chris, I’ve been involved in The Executive Leadership Council, an independent non-profit that opens channels of opportunity for the development of Black executives to positively impact business and our communities – for nearly 25 years. Over the last three years, there have been more members of The Executive Leadership Council who have joined boards than 20 years previously combined. All of that was a result of board refreshment and board augmentation.

As a board chair, I am always thinking four to five years down the road. Who do we need, why do we need them, and do we have customer-centric executives on the board? By the way, it is a tough situation.

Chris: Why?

Herman: Particularly good boards spend time together in four or five meetings a year, with at least 15 to 20 days tackling some extremely challenging situations.

It harkens back to my West Point and military experience, but whether it’s your sorority, your football team, your starting class – there is a strong camaraderie that is built in those small groups.

As a result, we probably are a little more reluctant to say, hey – those two are getting a little long in the tooth. I think we ought to probably let them go. Those are tough decisions. Some of those decisions happen. However, I do not think they happen often enough.

I must admit that I have been on my first public company board for two decades. When I joined, the stock was at $5, and we had $500 million worth of the debt. As of yesterday, the stock closed at $117. So, I probably violate all the ISS rules. That said, the value that this board has created for the shareholders, nobody can question that at all. I’m wholeheartedly engaged for a whole bunch of reasons. One of the reasons – I have a significant amount of my net worth invested in the company.

Chris: You have skin in the game.

Herman: Yes, I have skin in the game. Believe me, I am very, very engaged, vigilant, and active. However, even on that board we are looking to keep current and ensure that we have the proper board composition. This board utilizes age as a mechanism. There are no term limits, and the benchmark age is 72. By that measure, I could theoretically have six more years. However, we have already decided to transform the board because of our well-defined diversity and refreshment goals.

Specifically, I am the only African American on the board. We do have a Hispanic on the board, which was a move of four or five years ago. This company is in the construction industry, and many of our workers are Hispanic. In turn, one of my long-standing board colleagues voluntarily did not stand for reelection this year. To be very frank with you about what I told my colleagues in terms of diversity, I said, “I am ready to step down as well. However, what I want to see is continued diversity on the board”. I think that has made a difference, me being in the room on some very important subjects, not just to do with diversity, but with the global perspective that I bring to the table.

Chris: You had mentioned ISS, which is always the 800-pound gorilla in the room. Their latest voting guidelines indicate that they intend to hold individual directors accountable for climate change matters in terms of disclosure and risk management. What is your view?

Herman: Chris, I have somewhat conflicting views. On one hand, I am very much into sustainability and ESG. Boards must provide a vision for sustainable, long-term profitability, and existence.

Sustainable means that you are going to be around for a very long time. That considers not only the environmental factors but the culture, the governance, the employees, and the community.

When we talk about sustainability in terms of holding individual directors being accountable, how do you find out the one person? Do you go for the chair of the risk committee? Do you go for the chair of the audit committee where there is not a risk committee? Do you go for the chair of the nominating and governance committee when ESG is spread amongst all the committees?

I can tell you it’s being discussed in the boardroom, and it is heightening the attention. I think probably part of what their objective is for people to be more aware and feel more accountable, which is admirable.

Chris: Per a recent Diligent/Censuswide research survey – most risk and compliance professionals believe that it is incredibly hard communicating risk to corporate directors.

Herman: I find their survey results to be inconsistent with my personal experience. Directors are always thinking about risk. Who are our competitors? What are their likely reactions? What is the execution risk? What is our plan?

One of the things, Chris, that I have seen is independent “risk polling” of the board and senior management. Both polls have the same question – what do you see as the top 10 risks going into the year? It’s amazing when you get that list… there is probably a 65% to 75% overlap. However, the outliers that management comes up with makes for a robust discussion in the boardroom to fully understand the depth and breadth of each identified risk.

Chris: I know you personally believe in continuous learning. In that light, who sets the education curriculum for the boards that you serve on?

Herman: Case in point is USAA. As Vice Chairman, I am responsible for monitoring the training of the individual board members. In this instance, each board member has two things to accomplish: committee-specific knowledge and general governance education. We map out a process… training you must do and what we call “discretion within a box.”

We have a learning requirement that you do something specific to your committee in one year, and something specific to governance the following year, and so on, which provides a balanced director education.

Chris: What is left on your governance bucket list?

Herman: Wow. I feel very fortunate. The whole idea about governance is accountability. The accountability to all stakeholders, and the accountability to one another. The whole thing is what difference did I make?

One such example was the opportunity to bring my corporate governance experience to the West Point board (an association of West Point graduates). Eighteen years ago, they did not have an executive session without the CEO in the room. You know what? Little Herman Bulls brought that practice into being. It was the ability to take the general experience from one organization, applying it to a specific situation where you make a difference. That to me, is my ongoing goal in governance.

Chris: Herman, I hope you keep making that type of difference for many years to come. Thank you.

Herman Bulls is Vice Chairman, Americas, JLL, Inc., as well as an International Director and the founder of JLL’s Public Institutions Business Unit. Mr. Bulls co-founded and served as President and CEO of Bulls Capital Partners, a multi-family financing company. Prior to joining JLL, Mr. Bulls completed almost 12 years of active duty service with the United States Army.

Chris Clark joined Stuart Levine & Associates as a senior consultant after a distinguished career at the National Association of Corporate Directors (NACD). He has over thirty years of entrepreneurial and corporate business experience. His expertise ranges across a variety of disciplines including corporate governance with board assessments as a cornerstone, strategic communications, conference management, and digital content creation.