Wells Fargo has amended its bylaws to requires separate chairman and chief executive roles, the latest change in corporate policy after the bank's phony-accounts scandal.
Wells will now require both the chairman and vice chairman to be independent directors, the San Francisco company announced in a press release Thursday. The amendment was adopted by the board on Tuesday.
"We believe this action will enhance the board's independence and its oversight of the company's management, and we appreciate the feedback that we received from our investors on this matter," Stephen Sanger, Wells Fargo's chairman, said in the release.
The amendment codifies the changes put in place following the resignation of John Stumpf, who stepped down as chairman and CEO in early October amid accusations of misconduct. Wells in early September agreed to pay nearly $190 million to settle charges that roughly 5,300 branch employees created roughly 2 million unauthorized customer accounts.
The scandal quickly snowballed into a reputational crisis, and it renewed calls from analysts and investors for the bank to establish an independent chairman.
At the time of Stumpf's resignation, Sanger, a former chairman of General Mills, was named chairman; Elizabeth Duke, a former member of the Federal Reserve Board, was named vice chairman. Both served on the board before news of the scandal broke.
Tim Sloan, who previously served as president and chief operating officer, took over as CEO.
By splitting the chairman and CEO roles, Wells is likely avoiding a showdown over the issue at its annual meeting early next year. Shareholders had recently submitted resolutions on the matter.
Gerald Armstrong, a Wells Fargo investor and shareholder activist, said he thinks that the Wells announcement is likely a reaction to pressure from regulators.
"I do think the regulators forced them into it, because they were so adamantly opposed to [the positions being combined] in the past," said Armstrong, who has filed proposals in the past for the bank to split the chairman and CEO roles.
Wells combined the chairman and CEO roles shortly after the financial crisis. Stumpf was named CEO in 2007, succeeding longtime CEO Richard Kovacevich, who stayed on as chairman for two additional years, overseeing Wells' acquisition and integration of Wachovia.
Stumpf succeeded Kovacevich as chairman on Jan. 1, 2010.
The separation is the latest change in corporate policy in the aftermath of the scandal. The company dropped its product-sales goals for retail employees in October. It also recently announced plans to overhaul its compensation structure.
Wells continues to face pressure on multiple fronts – from regulators, investors and former employees. The
Wells has recently taken steps to make sure that lawsuits from customers affected by the fake accounts are decided
During an interview American Banker earlier this summer, before news of the account scandal broke, Sloan, Wells' president at the time, said the company would separate the two roles only if there was a "business reason" to do so.
"Frequently what happens is there's a focus on the role being a dual role when the company is not performing well," Sloan said in June. "We don't have that problem."
Kate Berry contributed to this report.
