Wells Fargo changed its by-laws to require a separate chairman and CEO, breaking with most of its U.S. peers after years of sales abuses in its branches spiraled into a national scandal.
That move is significant in an industry that has long fought off pressure from corporate governance activists and shareholders including pension managers, but it won’t change Wells Fargo’s current leadership. John Stumpf had held both roles at Wells Fargo until he stepped down in October under pressure from lawmakers. Tim Sloan was promoted that month to chief executive officer, while Stephen Sanger became non-executive chairman.
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The No. 3 U.S. bank by assets has made a change at the top after a snowballing scandal involving the creation of fraudulent accounts.
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The compensation loss is the biggest for a major U.S. bank chief since the 2008 financial crisis.
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The penalty is the largest ever imposed by the Consumer Financial Protection Bureau.
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The approach differs from almost all of Wells Fargo’s biggest competitors, including Bank of America Corp. and JPMorgan Chase & Co., which have persuaded shareholders not to divide the jobs in recent years. Citigroup is the only other bank among the nation’s top six that hasn’t granted both titles to its current leader.
Proxy advisers typically advocate for separating the two most powerful roles at a corporation. The issue resulted in a special vote last year at Bank of America after CEO Brian Moynihan was granted the chairman role without shareholder input. He ultimately prevailed in keeping both titles. At JPMorgan, similar proposals were defeated last year and in 2013. The idea was also put forth in 2014 and withdrawn before a vote.
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Wells Fargo has faced a barrage of criticism and calls for closer scrutiny since agreeing in September to pay $185 million over claims that employees may have opened more than 2 million unauthorized accounts for customers.
Under the bylaw change, the chairman and vice chairman of the board must be independent, the San Francisco-based company said Thursday in a statement. The changes are effective immediately.
