Wells Fargo & Co. said Elizabeth Duke would replace its chairman, Stephen Sanger, on Jan. 1, making the former Federal Reserve governor the first woman to hold a top board role at one of the nation's largest banks.
The San Francisco lender, which has battled a sales-practices scandal and other problems in recent months, announced the promotion of Ms. Duke, the board's vice chairman, Tuesday along with other changes.
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The moves represent the bank's strongest response yet to the high percentage of shareholders who voted against re-electing directors at its annual meeting in April, a clear sign of discontent after years of Wells Fargo being an investor favorite.
Mr. Sanger, 71, will leave after a tumultuous period presiding over the board's response to the fake-account scandal that last year led to the departure of former Wells Fargo Chairman and CEO John Stumpf.
Mr. Sanger, a former General Mills Inc. CEO, is one of three directors who will retire at the end of 2017, the company said. The other two are Cynthia Milligan and Susan Swenson, both of whom joined the board in the 1990s. Mr. Sanger would have hit the board's mandatory retirement age next year and is stepping down about four months early.
The bank also named its newest director, Juan Pujadas, who will start Sept. 1. Mr. Pujadas recently retired from PricewaterhouseCoopers LLP, the accounting giant where he had been a principal and held numerous senior roles. Some of the coming changes were outlined in a Wall Street Journal article last week.
Wells Fargo, the third-biggest U.S. bank by assets, has spent most of the past year trying to put last fall's sales-practices scandal behind it. Employees of the bank opened as many as 2.1 million accounts without customers' knowledge, sparking public and political outcries as well as numerous investigations.
More recently, the bank has said even more customer accounts may have been impacted. It also is facing new problems in its auto-lending unit over insurance policies potentially involving thousands of borrowers. The bank has said it would reimburse customers for around $80 million.
Ms. Duke became vice chair last October, when Mr. Stumpf abruptly retired in the face of the sales-practices scandal. Ms. Duke has served on the Wells Fargo board since January 2015.
She was a governor of the Federal Reserve from 2008 to 2013, the seventh woman to be appointed to the board and joining in the thick of the financial crisis.
"She developed a reputation for being extremely careful," and being "skeptical of some of the extreme moves the Fed took" around the financial crisis, said Peter Conti-Brown, a Fed historian and assistant professor at The Wharton School of the University of Pennsylvania.
Before her work at the Fed, Ms. Duke had served as an executive or CEO at a number of community banks in Virginia, where she is still based. Mr. Sanger said in a statement that she was the unanimous choice to lead the board. Timothy Sloan, Wells Fargo's CEO, added in the statement that her "regulatory expertise has been invaluable."
The bank said the board had been advised on the matter by another former regulator, former Securities and Exchange Commission chairman Mary Jo White. Ms. White is now a senior partner at law firm Debevoise & Plimpton LLP.
Wells Fargo also announced changes to key spots on board committees. As of Sept, 1, the board's risk committee will be led by former Bank of New York Mellon President Karen B. Peetz, who joined the board in February. She will succeed Enrique Hernandez Jr., who received a 53% shareholder approval rate at the bank's annual meeting. Nine directors in total received less than 75% approval from shareholders for re-election, with Mr. Hernandez having the lowest percentage. He remains on the board.
The bank is also changing the chairs of its governance and nominating committee and adding board members to committees overseeing corporate responsibility and audit.
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(END) Dow Jones Newswires
August 15, 2017 16:17 ET (20:17 GMT)