Wells Fargo said Thursday it has changed its bylaws to formally require its chairman and CEO roles to be held by separate people, a move that comes as the bank reels from a fake-accounts scandal.
It’s the latest step by the San Francisco-based bank to right itself following revelations employees opened potentially millions of accounts without customer approval. Wells Fargo said the bylaws amendment, made Tuesday by its board, is effective immediately.
Wells Fargo had previously split the chairman and CEO roles in October when then-CEO John Stumpf retired from the company amid the controversy over the bank’s sales practices. President and Chief Operating Officer Tim Sloan replaced Stumpf as CEO and took a seat on the board, which named lead director Stephen Sanger non-executive chairman.
“The board previously acted to elect an independent chairman to lead the board and 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 statement.
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The bylaws change will enhance the board’s independence and oversight of the company’s management, Sanger said. He also noted that a previously announced investigation by Wells’ independent directors of the bank’s sales practices and related matters continues “in earnest.”
Tuesday’s change also requires the board’s vice chairman to be independent. Since October, that role continues to be filled by Elizabeth Duke, a former Federal Reserve Board governor and Wachovia banker.
Investors had been pushing for Wells to make changes to its board in the wake of the accounts scandal, which has tarnished the bank’s reputation and sparked a bevy of new federal probes.
On Tuesday, Connecticut state treasurer Denise Nappier announced that she and other investors had filed a shareholder resolution calling for a change in the bank’s bylaws to require an independent, non-executive board chair. Some corporate governance experts say keeping the chairman and CEO roles separate provides better oversight of a company’s management.
Some investors have also called for new board directors at Wells Fargo.
Wells Fargo’s move Tuesday contrasts with an action taken in 2014 by Charlotte-based Bank of America, which sparked investor backlash when it removed a bylaws requirement for an independent chairman. That decision, which shareholders voted to approve nearly a year later, came after investors voted in 2009 to split the CEO and chairman roles in the fallout from the bank’s handling of its Merrill Lynch purchase.
Wells Fargo’s decision bucks a trend for big U.S. banks. New York-based Citigroup is the only other big bank to have different people in the CEO and chairman roles.