Former Fed governor will be first woman to hold top board role
at a large U.S. bank
By Emily Glazer
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 16, 2017).
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.
The moves represent the bank's strongest response yet to the
high percentage of shareholders who voted against 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 said in a Tuesday interview that it is "time to change
into another gear."
She added that she can bring her understanding of the financial
system, importance of safety and soundness, and risk management to
the role. That is alongside her "appreciation" for fair and
responsible consumer financial services as Wells Fargo "is shifting
from a sales culture to a service culture."
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 Federal Reserve, Ms. Duke had served as
an executive or CEO at a number of community banks in Virginia,
where she will remain. Timothy Sloan, Wells Fargo's CEO, added in
the statement that her "regulatory expertise has been
invaluable."
Mr. Sanger said in an interview that the board reconnected with
shareholders after its April annual meeting and accelerated its
annual self-evaluation to July from December.
In July Mr. Sanger asked another former regulator, former
Securities and Exchange Commission chairman Mary Jo White to
facilitate the board's self-evaluation, which resulted in the
reshuffling. Ms. White, who is now a senior partner at law firm
Debevoise & Plimpton LLP, said in an interview she spoke with
all board directors and about half a dozen top executives to hear
their assessment of the board's workings and how the relationship
with management is going.
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.
Mr. Sanger said he and Ms. Duke will reconnect with shareholders
during the typical fall outreach but the transition is earlier than
expected because "it is symbolic and appropriate; we're not just
doing business as usual."
Ms. Duke will take the lead on the proxy, annual report and
chairman's letter where preparation in earnest begins early next
year.
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
August 16, 2017 02:48 ET (06:48 GMT)
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