Today Wells Fargo & Company (NYSE:WFC) announced what it described as “a range of board refreshment actions.”
The key plays are as follows: Former Federal Reserve System Governor Elizabeth A. “Betsy” Duke will succeed Stephen W. Sanger as independent Chair, effective January 1, 2018; three long-serving directors (including Sanger) will retire at year-end 2017; a new independent director will be added and the composition of board committees will be shuffled effective September 1, 2017.
The actions announced today are in addition to the appointment earlier this year of two new independent directors, Karen B. Peetz and Ronald L. Sargent. The board expects to name up to three additional independent directors before the 2018 Annual Meeting.
To facilitate its 2017 self-evaluation, the board engaged Mary Jo White, a senior partner at Debevoise & Plimpton LLP and former Chair of the Securities and Exchange Commission.
Chair Transition
The board of directors named Duke to serve as board Chair, effective January 1, 2018. Sanger will assist in the transition until his retirement. Duke, a former member of the board of Governors of the Federal Reserve System, has served on the board since January 2015 and as Vice Chair since October 2016.
“Betsy was the unanimous choice to lead the board as it continues its focus on strengthening oversight and rebuilding the trust of shareholders, customers, and other stakeholders,” said Sanger. “Her broad understanding of the financial system and markets combined with years of main street community banking experience make her the ideal Chair to work with the rest of the board and Tim Sloan as Wells Fargo continues to move forward.”
“On behalf of the entire board, I want to thank Steve for his tireless work as chairman,” Duke said. “He really stepped up to lead the board at a time of significant challenge for Wells Fargo. I look forward to a smooth transition over the coming months as we work with the board and Tim to make Wells Fargo a better company today and in the future.”
Addition of New Independent Director; Three directors Retiring from board at Year-End
As part of the board’s commitment to refreshment, the board made several changes in board composition, including the election of a new independent director, and continues to focus on the recruitment of new directors who will complement the overall mix of skills, experience, and perspectives on the board.
The board elected Juan A. Pujadas, a retired principal of PricewaterhouseCoopers (“PwC”) LLP, as a new independent director, effective September 1, 2017. Among many senior positions at PwC, Pujadas was Vice Chairman of Global Advisory Services of PwC International, led the U.S. firm’s Advisory Practice, and led PwC’s Global Risk Management Solutions practice for the Americas.
Additionally, to help facilitate board refreshment and provide for an appropriate transition of committee membership, Cynthia H. Milligan (who joined in 1992) and Susan G. Swenson (who joined in 1998) will retire from the board at year-end 2017. With Pujadas, and the retirements of Sanger, Milligan, and Swenson, the board will have 13 members and an average tenure of six years for the 12 independent directors.
The bank’s board announced that it expects to move over time toward the lower end of its recent historical range of 14 to 16 directors.
Committee Leadership and Composition Changes
The board also made several changes to the leadership and composition of key board committees. Those changes, effective September 1, 2017, include:
Risk Committee: Peetz will join and succeed Enrique Hernandez, Jr. as Chair of the Risk Committee. Peetz has deep expertise in risk management drawing from her 35-year experience at large financial institutions, most recently as President of Bank of New York Mellon. Pujadas and Suzanne M. Vautrinot also were added as new members, while Lloyd H. Dean, Milligan, Federico F. Peña, and Sanger are rotating off of the Risk Committee. Risk Committee composition will be: Peetz (Chair), Duke, Hernandez, Pujadas, James H. Quigley, and Vautrinot.
Governance and Nominating Committee (GNC): Donald M. James will join and succeed Sanger as Chair of the GNC. Duke also was added as a new member, and Milligan, Sanger and Swenson are rotating off of the GNC. GNC composition will be: James (Chair), Dean, Duke, Peña, and Sargent.
Corporate Responsibility Committee (CRC): Vautrinot was added as a new member of the CRC. CRC composition will be: Peña (Chair), John D. Baker II, Dean, Hernandez, Milligan, and Vautrinot.
Audit & Examination (A&E) Committee: Sargent was added as a new member of the A&E Committee, while Vautrinot is rotating off given her appointment to the Risk Committee and the CRC. A&E Committee composition will be: Quigley (Chair), Baker, Peña, Sargent, and Swenson.
The board previously added Sargent to the GNC, and Sargent and Peetz to the board’s Human Resources Committee, upon their election to the board in February 2017. Pujadas also will serve on the board’s Credit Committee and Finance Committee.
Other Governance Changes
Other changes in the near term include overhauling the Corporate Governance Guidelines and board committee oversight responsibilities.
All of the actions announced today, as well as the actions taken during the past several months, reflect the board’s commitment to continued enhancement of its governance practices. These actions have included:
- Separating the roles of board Chair and Chief Executive Officer and amending Wells Fargo’s By-Laws to require that the Chair be an independent director
- Adding six new directors since 2013 (three in 2017 to date), with six directors retiring between the 2016 Annual Meeting and year-end 2017
- Enhancing the board’s oversight of conduct risk, including sales practices risk, by amending board committee charters to, among other things, expand the Risk Committee’s responsibilities to include oversight of Wells Fargo’s new Conduct Management Office (formerly called the Office of Ethics, Oversight, and Integrity) and expand the Human Resources Committee’s responsibilities to include oversight of human capital management, culture, and the Code of Ethics and Business Conduct.
Biographies
Betsy Duke
Duke served as a member of the board of Governors of the Federal Reserve System from August 2008 to August 2013, where she was Chair of the Federal Reserve’s Committee on Consumer and Community Affairs and a member of its Committee on Bank Supervision and Regulation, Committee on Bank Affairs, and Committee on board Affairs. Previously, she was chief operating officer of TowneBank from 2005 to 2008, and was an executive vice president at Wachovia Bank, N.A., (2004 to 2005) and at SouthTrust Bank (2001 to 2004), which was acquired by Wachovia in 2004. Ms. Duke also served as chief executive officer of Bank of Tidewater, which was acquired by SouthTrust, and chief financial officer of Bank of Virginia Beach. She served on the board of directors of the American Bankers Association from 1999 to 2006, becoming the first woman to serve as chair of the ABA in 2004, and as a member of the board of directors of the Federal Reserve Bank of Richmond.
Juan Pujadas
Pujadas is a retired principal of PwC LLP and served as the Vice Chairman, Global Advisory Services of PwC International from 2008 to 2016. Previously, Pujadas led PwC’s U.S. firm’s Advisory Practice from 2003 to 2009 and held several other senior management positions at PwC, including Managing Partner for Strategy and leader of the Global Risk Management Solutions (“GRMS”) practice for the Americas, the Financial Services GRMS practice, and the global Financial Risk Management Group. Before joining PwC, Pujadas served as the Chief Risk Officer of Santander Investment, the international investment banking arm of the Santander Group, from 1995 to 1998. He was a member of the executive committee of Santander Investment and the management committee of the commercial banking division of Banco Santander. Before joining Santander, Pujadas was a principal in the Capital Markets and Treasury Group of PwC’s U.S. firm’s financial services industry practice, specializing in the development and application of financial and information technology to balance sheet risk management and capital markets and treasury activities.
