June 30 (Bloomberg) -- Rules being considered by the Securities and Exchange Commission would force Bank of America Corp. to explain how leading the 2003 invasion of Iraq prepared former U.S. General Tommy Franks to sit on its audit committee.

Franks and ex-Admiral Joseph Prueher, who both resigned as directors of the bank this month, are among military leaders and athletes paid as directors by U.S. companies. They include seven-time Tour de France champion Lance Armstrong, who quit Morgans Hotel Group Co. after missing 11 board meetings in 2007.

“The point of a director is to monitor management, and folks who are there simply because they are celebrities I don’t think add anything to the mix,” Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said today on Bloomberg Television.

The rules to be discussed by the SEC tomorrow would require companies to disclose information about directors’ skills and experience on issues from executive pay to accounting rules. The agency is acting after boards at Bank of America, the biggest U.S. bank by assets, and Countrywide Financial Corp. failed to rein in lending that contributed to the financial crisis.

The agency, at a Washington meeting, also may bar brokers from voting clients’ shares in director elections and propose rules to let shareholders vote on executive pay at firms that got government bailouts.

Armstrong, Robertson

U.S. companies’ celebrity directors include Armstrong, 37, who quit last year after being paid $71,644 by Morgans; National Football League running back O.J. Simpson, 61, a member of four boards and the audit committee at Infinity Broadcasting Corp. before prosecutors charged him in the 1994 murders of ex-wife Nicole Brown Simpson and her friend; and National Basketball Association hall-of-fame guard Oscar Robertson, 70, a Countrywide director for eight years until the lender, at risk of collapse, was bought by Bank of America in 2008.

“What the SEC wants to do is prompt companies to make sure they’re appointing directors who can do the job and not just look pretty on a roster,” said Stephen Davis, a senior fellow at the Millstein Center for Corporate Governance and Performance at the Yale School of Management.

The appointment of iconic directors extends to politicians, as heads of state often land on boards when they leave office. Former U.S. President Gerald Ford was a director of Travelers Group Inc. until 1998, when he was 85. Travelers merged with Citicorp that year to form Citigroup Inc. and Ford remained an honorary director until 2006, the year he died.

Franks, 64, coordinated U.S. combat in Iraq and Afghanistan before retiring as a four-star Army general in 2003 after 38 years. Prueher led U.S. Pacific command until retiring in 1999 after 35 years, and was U.S. ambassador to China from 1999 to 2001. Both resigned from Bank of America’s board June 19.

Franks, Prueher Pay

Franks in 2008 received $127,376 as a bank director, and Prueher, serving as a Merrill Lynch & Co. director in 2007 before Bank of America acquired the brokerage, was paid $278,810, according to SEC filings. Prueher has served as a director of DynCorp International Inc., Emerson Electric Co., Fluor Corp. and New York Life Insurance Co.

Bank of America spokesman Scott Silvestri declined to comment on the men’s qualifications to be directors.

Recruiting celebrity directors can bring benefits, such as helping a company burnish its image or pursue new business opportunities, said David Becher, an associate finance professor at Drexel University in Philadelphia.

‘Star May Help’

“If I’m a firm that needs to raise money, a star may help you because of their public profile,” he said. “If a defense company is trying to get an Army or Navy contract, what better person is there than a retired general who has government contacts?”

Bank of America agreed to buy Calabasas, California-based Countrywide in January 2008 for $4 billion after the mortgage lender’s market value plummeted 85 percent in the preceding year and the company had its first quarterly loss in more than two decades.

Robertson joined Countrywide’s board in 2000, serving as the bank’s loans to the least creditworthy borrowers surged more than ninefold, to $40.1 billion from $4.16 billion.

He was on the compensation committee in 2006, when the board paid former Chief Executive Officer Angelo Mozilo $48.1 million, and was on the finance committee that oversaw “financial objectives, policies, procedures and activities,” according to Countrywide’s 2007 proxy statement.

Mozilo’s and Robertson’s business careers crossed in 1997 when Countrywide bought Midwest Group of Funds, a Cincinnati- based mutual-fund company where Robertson was a trustee. Robertson, a 1960 graduate of the University of Cincinnati’s College of Business, owns a chemical manufacturer and a company that provides document services to businesses.

Not ‘Typical Athlete’

“This is not your typical athlete,” said Michael O’Daniel, Robertson’s partner at Oscar Robertson Media Ventures, which sells books and DVDs about the player. O’Daniel said Robertson declined to comment and calls left for him at his office weren’t returned.

The SEC will take up additional proposals tomorrow supported by shareholder groups. The reforms include prohibiting stockbrokers from casting ballots for clients in director elections, giving shareholders a non-binding vote on the pay of top executives at banks that haven’t repaid U.S. aid, such as Bank of America, Citigroup and Wells Fargo & Co., and requiring companies to provide a written description of risks posed by their compensation policies.

The Council of Institutional Investors, a Washington-based group representing pension funds and large investors, argues that brokers tend to back management’s board nominees, skewing election results.

To contact the reporters on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net; Ian Katz in Washington at ikatz2@bloomberg.net.

Last Updated: June 30, 2009 09:30 EDT