Wells Fargo shakes up board after scandal
Vice chair Betsy Duke will move into the top spot in January
Wells Fargo is shaking up its board of directors in the embattled bank’s latest effort to regain customer trust following its scandal over millions of unauthorized accounts.
Former Federal Reserve governor Elizabeth “Betsy” Duke, the board’s current vice chairperson, on Jan. 1 will become the first woman to hold the top board spot at one of the nation’s largest banks, Wells Fargo announced Tuesday. Duke will succeed Stephen Sanger, the former chairman and CEO of General Mills who joined the Wells Fargo board in 2003 and was elected board chairman in October 2016.
The changes, characterized as a “refreshment action” by Wells Fargo, marked the bank’s most strident action so far to investor discontent with the bank’s leadership that erupted in response to the scandal.
Last September, federal regulators and Los Angeles officials hit Wells Fargo with $185 million in civil penalties for secretly opening millions of deposit accounts, credit cards and other financial products, apparently without customer authorization or knowledge. The actions resulted from Wells Fargo sales goals and pay incentives that pushed tellers and other employees to sign up customers for as many accounts as possible.
Other major Wells Fargo problems have erupted in the months since the embarrassing episode, which prompted the bank to revise its incentive policies, fire several top executives and claw back payments from former CEO John Stumpf and a second former official.
Most recently, Wells Fargo disclosed in July that it would make $80 million in payments to more than 570,000 auto loan customers who were also charged for au- to insurance without their knowledge.
Other new Wells Fargo board changes include the addition of Juan Pujadas, a retired principal of accounting giant PricewaterhouseCoopers, as a new independent director, starting in September.
Two other board members, Cynthia Milligan and Susan Swenson, will retire at the end of the year.
Wells Fargo previously added Karen Peets and Ronald Sargent as independent directors and expects to name three additional independent board members before the bank’s 2018 annual meeting.
“The changes announced today reflect a thoughtful and deliberate process by the board that was informed by the company’s en- gagement with shareholders and other stakeholders, as well as the board’s annual self-evaluation that was conducted after the 2017 annual meeting,” Sanger said in a formal statement about the shakeup.
Held in April, the annual shareholder meeting showcased the depth of investor dissatisfaction with the bank’s leadership. Several shareholders disrupted the session with criticism of the scandal, and one demanded to know when board members first learned about it.
Duke is a banking industry veteran who was a member of the Federal Reserve’s board of governors from August 2008 to August 2013.
During that time, she chaired the Fed’s committee on consumer and community affairs.