ShareThis Page

State treasurers renew call for independent chair at Wells Fargo

| Tuesday, Nov. 29, 2016, 9:36 p.m.
In this July 14, 2014, file photo, a man passes by a Wells Fargo bank office in Oakland, Calif.
In this July 14, 2014, file photo, a man passes by a Wells Fargo bank office in Oakland, Calif.

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.

TribLIVE commenting policy

You are solely responsible for your comments and by using you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.