State treasurers renew call for independent chair at Wells Fargo
Investors, including the state treasurers of Connecticut and Illinois, called on Wells Fargo & Co. to require an independent board chair, saying the bank needs stronger oversight in the wake of a scandal over fake customer accounts.
Although Wells Fargo has shuffled its leadership structure, Connecticut Treasurer Denise Nappier on Tuesday said the investor group has filed a shareholder resolution for the San Francisco bank's annual meeting next spring seeking a change in its bylaws.
Improvements need to be formalized, she said, because a board whose chair is also chief executive — the dual role once held by John Stumpf at Wells Fargo — creates a potential conflict of interest.
“At the end of the day, the company's shameful conduct was fueled by poor governance that fostered a culture of irresponsibility and deficiencies in risk management,” Nappier said in a statement.
Via email, Wells Fargo spokesman Ancel Martinez said, “We appreciate the feedback that we receive from our investors and we will review the proposal.”
Stumpf resigned on Oct. 12, bowing to pressure after a $190 million settlement the bank reached with regulators in September. Reviews found the bank's staff opened as many as 2 million accounts without customers' knowledge to meet internal sales targets.
Stumpf was replaced as CEO by the bank's president, Tim Sloan. The role of board chair was given to Stephen Sanger, who had been Wells Fargo's lead director and was listed as independent in the bank's latest proxy filing.
Nappier called the splitting of the roles “a welcome first step” but said Wells Fargo must still put a better leadership structure in place.
Co-filers of the resolution included Illinois state Treasurer Michael Frerichs, shareholder adviser Hermes EOS and Needmor Fund, which had filed before Stumpf's departure.
In a separate news release Tuesday, Frerichs said the bank's “predatory and illegal banking practices have proved that the company needs a set of independent eyes to ensure stronger, unbiased oversight.”
Frerichs had earlier cut some state business with Wells Fargo, such as suspending its use as a broker dealer.
Meanwhile, the company's most senior executives decided early this year to remove retail-banking chief Carrie Tolstedt from her post, months before she announced plans to retire and her division became the epicenter of a national scandal.
The behind-the-scenes deliberations were described in a letter the bank sent to U.S. lawmakers in September, according to a copy posted online this week by officials in California. It offers new details on what led up to her departure, and shows that Sloan played a role in it.
Some lawmakers took particular issue with a July news release in which then-CEO Stumpf, 63, lauded Tolstedt's leadership while announcing she decided to retire at year-end. She relinquished her post that month.
But, privately, Stumpf had conferred early in the year with Sloan, 56, who became chief operating officer in November.
After the conversation, Stumpf “decided that for various reasons the business would move in a different direction, meaning that Ms. Tolstedt would be removed,” the bank wrote. “After Ms. Tolstedt was told of the decision, she decided that she would retire.”
The letter doesn't elaborate on the reasons. Tolstedt, 57, didn't respond to messages seeking comment.
Jennifer Dunn, a Wells Fargo spokeswoman, declined to comment on internal discussions about Tolstedt's departure.