How Wells Fargo chairman and CEO John Stumpf probably feels right about now. Image source: iStock/Thinkstock.
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Wells Fargo (NYSE: WFC) announced a sweeping overhaul of its C-suite on Monday, shifting power away from chairman and CEO John Stumpf and toward his heir apparent, president and chief operating officer Tim Sloan.
If you get the chance, I encourage you to read the press release issued by Wells Fargo. It's a textbook example of how embattled companies disguise their true intentions in times of trouble.
Let's start with the headline: "Wells Fargo Forms New Business Group Focused on Payments, Virtual Solutions and Innovation."
Who would want to read a press release about that?
Total snoozer, right?
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And that's the point.
Because if you click on the press release and engage your brain -- which, evidently unbeknownst to Wells Fargo, many of us are capable of doing -- what you see is a dramatic overhaul of Wells Fargo's executive ranks and reporting structure.
When The Wall Street Journal reported the news yesterday, here's how the paper's Emily Glazer interpreted the bank's announcement:
Wells Fargo & Co. announced Monday that it is shuffling a number of top executives even as the bank continues to grapple with the fallout from its sales-tactics scandal.
The moves allow President and Chief Operating Officer Timothy J. Sloan to cement the position of a number of his lieutenants, according to people familiar with the bank. Mr. Sloan is widely expected to take over for Chief Executive John Stumpf in the next two years, these people said.
I don't know about you, but I don't see anything in there about payments or these mysterious virtual solutions referred to in the headline of the press release. Glazer talks about these things later in the article, but that information is very clearly of secondary importance.
The most important thing to note from the press release is that Wells Fargo is positioning Sloan to take over, and probably sooner rather than later. Following the reshuffle, here's who will report to him:
- Mary Mack, head of Community Banking
- Perry Pelos, head of Wholesale Banking
- David Carroll, head of Wealth and Investment Management
- Franklin Codel, head of Consumer Lending
- Avid Modjtabai, head of Payments, Virtual Solutions and Innovation
See those first three people on the list?
They run all three of Wells Fargo's operating segments. For all intents and purposes, then, this removes Stumpf from having direct control over the bank's day-to-day operations.
That's probably a good thing when you consider that Stumpf supported the bank's decision to fire 5,300 low-level employees who, if countless reports are to be believed, were all but physically forced to commit fraud in order to ply their customers with at least eight financial products, whether the products were good for customers or not.
Because eight rhymes with great.
That's how Stumpf sets strategy.
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John Maxfield owns shares of Wells Fargo. The Motley Fool owns shares of and recommends Wells Fargo. The Motley Fool has the following options: short October 2016 $50 calls on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.