Wells chief Stumpf to leave bank immediately
John Stumpf: ‘I have decided it is best for the company that I step aside’ © AP
John Stumpf, Wells Fargo chairman and chief executive, is to leave with immediate effect after conceding that he had “become a distraction” as the bank tries to recover from its sham account scandal.
However, the decision by the bank — the world’s most valuable before the scandal erupted — to replace Mr Stumpf with two longstanding insiders drew immediate political fire.
In a separation of the top jobs, Tim Sloan, a 29-year veteran of the bank and its president and chief operating officer, will become chief executive while Stephen Sanger, the board’s lead director, is to be chairman.
Mr Stumpf caved in to pressure from Washington five weeks after regulators disclosed findings that thousands of Wells employees, under pressure to meet sales targets, had fraudulently created as many as 2m accounts.
The change at the top was not enough to satisfy Maxine Waters, a Democratic ranking member of the House of Representatives’ financial services committee. “Tim Sloan is also culpable in the recent scandal, serving in a central role in the chain of command that ought to have stopped this misconduct from happening,” she said.
Mr Stumpf, who made cross-selling a central part of Wells’ strategy, had been lambasted over the episode, enduring hostile grillings from lawmakers on Capitol Hill.
In an interview on Wednesday, Mr Sloan said his predecessor had decided to go “without any pressure from the board … It’s an incredibly selfless act when you think about it.”
“He felt that he’d become a distraction. There was so much focus on John. That’s not what Wells is about. What Wells is about is serving its customers.”
Mr Sloan, with a background in the commercial and wholesale side of the business, has not been dragged into the scandal, which took place at its community banking division.
He has been reinforcing his position as heir apparent. Last November, he took on the titles of president and chief operating officer while also remaining head of wholesale banking.
The bogus accounts debacle has accelerated a long-planned succession. Mr Stumpf, a 34-year veteran of the bank, had been expected to go before he turns 65, in two years.
Wells said on Wednesday he would not receive a severance package, although he leaves with an estimated $28m of retirement benefits and about $110m in stock that he owns both directly and through a family trust.
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Elizabeth Warren, the bank-bashing senator who had called on the Wells chief to be “criminally investigated” over the faked accounts, tweeted: “If Wells Fargo’s John Stumpf is leaving with all of his ill-gotten millions, that’s still not real accountability.”
Mr Stumpf told the board he would not sell the shares he owns until an ongoing internal investigation into the fake accounts completes, according to a person familiar with the matter.
He is also leaving it open for awards to be clawed back if the board deems that appropriate. Under tax laws, his retirement benefits cannot be paid out for six months.
Mr Stumpf had already forfeited more than $40m in pay and said he was “deeply sorry” for the bank’s conduct.
In a statement on Wednesday Mr Stumpf said he was “optimistic” about the bank’s future.
“While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside,” he said. “I know no better individual to lead this company forward than Tim Sloan.”
The new chairman, Mr Sanger, has sat on the Wells board since 2003 and has been its lead director since 2012. He ran General Mills, the food producer and distributor, between 1995 and 2007 and is also on the board of Pfizer.
Shares in Wells rose 1.8 per cent in after-hours trading.