Wells Fargo’s time of transition continued on Tuesday when the bank announced that it is making several changes to its board of directors, including naming a new board chair just 10 months after Stephen Sanger replaced John Stumpf as the bank’s chair.
Sanger ascended to the position of leadership after Stumpf resigned as the bank’s chief executive officer and board chairman in the wake of the bank’s fake account scandal, which saw the bank fined $185 million for more than 5,000 of the bank’s former employees opening more than 2 million potentially unauthorized accounts to get sales bonuses.
Sanger took over in October 2016, but will only serve as board chair until the end of this year, as the bank announced Tuesday that Sanger will retire at the end of the year. Sanger has served on Wells Fargo’s board for more than 14 years.
Replacing Sanger will be Elizabeth Duke, who took over as the bank’s vice chair at the same time that Sanger became chair.
Duke is a former member of the Board of Governors of the Federal Reserve System and joined Wells Fargo’s board as an independent director in January 2015.
Duke served as a Fed Governor from August 2008 to August 2013. During her time at the Fed, Duke was chair of the Federal Reserve’s Committee on Consumer and Community Affairs and a member of its Committee on Bank Supervision and Regulation, Committee on Bank Affairs, and Committee on Board Affairs.
Duke was also chief operating officer of TowneBank from 2005 to 2008, and was an executive vice president at Wachovia Bank from 2004 to 2005 and at SouthTrust Bank from 2001 to 2004.
Duke will officially become chair on Jan. 1, 2018, and Wells Fargo noted that Sanger will assist in the transition until his retirement.
Duke takes the reins during what could easily be described as a tumultuous time for Wells Fargo.
The fake account scandal also led to the bank revoking the 2016 bonuses for its top executives, clawing back even more money from several top execs, firing four senior managers in February, tossing out another two executives in March, and splitting the role of chairman and CEO after Stumpf stepped down.
The bank is also nearing a $142 million settlement in a class action lawsuit brought by the customers affected by the fake accounts.
And in just the last few weeks, Wells Fargo disclosed that it is preparing to hand out $80 million in remediation for potentially wrongfully force-placing auto insurance on as many as 570,000 customers, and announced that it agreed to pay $108 million to the federal government to settle allegations that the bank overcharged military veterans for refinance loans.
Both Sanger and Wells Fargo CEO Timothy Sloan expressed confidence in Duke’s ability to lead the bank.
“Betsy was the unanimous choice to lead the Board as it continues its focus on strengthening oversight and rebuilding the trust of shareholders, customers, and other stakeholders,” Sanger said of Duke. “Her broad understanding of the financial system and markets combined with years of main street community banking experience make her the ideal Chair to work with the rest of the Board and Tim Sloan as Wells Fargo continues to move forward.”
Sloan added: “Betsy’s regulatory expertise has been invaluable to Wells Fargo, and I know that the combination of her banking and risk management experience will continue to serve the Board and the company well in her new role as Chair.”
In a statement, Duke thanked Sanger for shepherding the bank through the turbulence of the last few months.
“On behalf of the entire Board, I want to thank Steve for his tireless work as Chairman,” Duke said. “He really stepped up to lead the Board at a time of significant challenge for Wells Fargo. I look forward to a smooth transition over the coming months as we work with the Board and Tim to make Wells Fargo a better company today and in the future.”
But that was not the only change to Wells Fargo’s board.
Two other long-serving members of Wells Fargo’s board will also be retiring –Cynthia Milligan, who joined the bank’s board in 1992, and Susan Swenson, who served on the board since 1998.
Both Milligan and Swenson will be joining Sanger in retiring at the end of 2017.
“We would like to thank Cynthia Milligan and Susan Swenson for their many contributions and service to the Board and company over the years,” Sanger said. “Their leadership was instrumental in guiding the company through numerous economic, regulatory, and market cycles, including the 2008 financial crisis.”
Duke said that Milligan and Swenson served as an inspiration to her in becoming directors at a company like Wells Fargo.
“These outstanding directors joined the Wells Fargo Board when there were few women on corporate boards. I hope they will be an inspiration to other women as they are to me,” Duke said. “Cynthia Milligan used her experience as a former state bank regulator in her leadership of the Credit Committee while Sue Swenson brought critical technology expertise as the technology environment of banking underwent significant change.”
Wells Fargo also announced that Juan Pujadas, a retired principal of PricewaterhouseCoopers, will be joining the bank’s board as an independent director on Sept.1, 2017.
“We are very pleased to add another exceptional leader to our Board with executive management experience and significant risk management, financial services, finance, technology, and international experience,” Sanger said of Pujadas. “Juan’s perspective on key risks facing financial institutions will provide important contributions to the Board’s risk oversight expertise.”
The bank noted with the addition of Pujadas and the departures of Sanger, Milligan, and Swenson, Wells Fargo’s board will have 13 members total, twelve of which are independent. According to the bank, the 12 independent directors have an average tenure of six years.
“The changes announced today reflect a thoughtful and deliberate process by the Board that was informed by the company’s engagement with shareholders and other stakeholders, as well as the Board’s annual self-evaluation that was conducted after the 2017 annual meeting and prior to its typical year-end timing,” Sanger said.
