Shares of Wells Fargo (WFC) are in focus on Wednesday morning after the bank said Elizabeth “Betsy” Duke will succeed Stephen Sanger as independent chair. The board shuffle comes as Wells seeks to recover from a scandal involving its sales practices.
DUKE NAMED CHAIR: Betsy Duke, Wells Fargo’s current vice chair and a former Federal Reserve Board governor, will succeed Stephen Sanger as retiring chair, effective January 1, one of several changes the bank announced yesterday. Sanger will retire at the end of the year, earlier than his previous plans to depart in April. Duke joined Wells Fargo’s board in 2015 and became vice chair last year. Duke was the “unanimous choice” to lead the board, Sanger said in a statement.
OTHER CHANGES: When Sanger retires, two long-serving directors, Cynthia Milligan and Susan Swenson, will also retire. Juan Pujadas, a former PricewaterhouseCoopers principal, will join Wells Fargo as an independent director on September 1. With Pujadas, and the retirements of Sanger, Milligan, and Swenson, the board will have 13 members and an average tenure of six years for the 12 independent directors, the bank said. These actions are in addition to the appointment earlier this year of two new independent directors, Karen Peetz and Ronald Sargent. The bank’s board expects to name up to three additional independent directors before the 2018 Annual Meeting, it added. Wells Fargo commented that “The board intends to continue adding new directors while maintaining an appropriate balance of experience and perspectives on the board. Although the board’s size may fluctuate in the near term as it recruits new directors, the board expects that its size will move over time toward the lower end of its recent historical range of 14 to 16 directors.”
WHAT’S NOTABLE: Wells Fargo said these actions reflect the board’s commitment to “continued enhancement” of its governance practices, with actions including the separation of the CEO and board chair roles. Sanger has been on Wells’ board for 14 years and became chair in October after then-chair and CEO John Stumpf abruptly stepped down. Yesterday’s announcement is the latest step Wells Fargo is taking since it paid $185M in penalties last year in a scandal over millions of fake accounts it opened in customers’ names to meet aggressive sales goals. Last month, the bank said it would also pay $80M in damages to customers after revelations the company improperly charged customers for auto insurance. Senator Elizabeth Warren also called on Fed Chair Janet Yellen to remove members of Wells Fargo’s board, saying that the charges at the bank indicates “deep risk management problems.”
