Wells Fargo amends bylaws to separate chairman and CEO roles
Wells Fargo & Co said on Thursday its board had amended bylaws to require that the bank separate the chairman and chief executive roles, a win for activists who had pressed for the change after a scandal over unauthorized customer accounts.
The amendment also calls for the chairman and vice chairman of the board to be independent directors, and provides an annual retainer of $250,000 for the chairman and $100,000 for the vice chairman.
Investors, including the state treasurers of Connecticut and Illinois, had filed a resolution calling on the bank to require an independent board chair.. The investors said the bank needs stronger oversight after it emerged in September that thousands of Wells' branch staff had opened as many as 2 million accounts without customers' consent to meet sales targets.
The scandal led to the departure of former Chairman and Chief Executive John Stumpf on Oct. 12. President and Chief Operating Officer Tim Sloan replaced Stumpf as CEO, while lead independent director Stephen Sanger became chairman.
"We believe formalizing this structure is the right decision at this time for the company and its investors, customers, and team members," Sanger said in a press release.
Wells Fargo reached a $190 million regulatory settlement over the unauthorized accounts, though other government inquiries and investor lawsuits are still outstanding.
Tim Smith, who leads shareholder engagement efforts at Walden Asset Management, which represents one of the filers of the shareholder resolution, said investors planned to withdraw it in response to the bank's action on Thursday.
Of the new bylaw, Smith said via e-mail, "We believe this is a best governance practice and empowers the Board in its role of overseeing management on behalf of investors."
It is common among the largest U.S. banks to combine the chairman and CEO jobs, as at JPMorgan Chase & Co and Goldman Sachs Group Inc , despite frequent pressure from activists to break up the jobs in the wake of the stumbles.
Bank of America Corp split up the titles after the financial crisis, then unilaterally changed its bylaws in 2014 to give CEO Brian Moynihan the chairman's title and held a shareholder vote the following year that authorized the change.
A spokesman for Wells Fargo referred questions about the bylaw change to public relations firm Sard Verbinnen, which declined to comment.
(Reporting by Dan Freed in New York and Ross Kerber in Boston; Additional reporting by Sruthi Shankar in Bengaluru; Edited by Carmel Crimmins and Tom Brown)