Wells Fargo & Co said on Thursday its
board had amended bylaws to require that the bank separate the
chairman and chief executive roles, a win for activists who had
pressed for the change after a scandal over unauthorized
The amendment also calls for the chairman and vice chairman
of the board to be independent directors, and provides an annual
retainer of $250,000 for the chairman and $100,000 for the vice
Investors, including the state treasurers of Connecticut and
Illinois, had filed a resolution calling on the bank to require
an independent board chair.. The investors said the
bank needs stronger oversight after it emerged in September that
thousands of Wells' branch staff had opened as many as 2 million
accounts without customers' consent to meet sales targets.
The scandal led to the departure of former Chairman and
Chief Executive John Stumpf on Oct. 12. President and Chief
Operating Officer Tim Sloan replaced Stumpf as CEO, while lead
independent director Stephen Sanger became chairman.
"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 press release.
Wells Fargo reached a $190 million regulatory settlement
over the unauthorized accounts, though other government
inquiries and investor lawsuits are still outstanding.
Tim Smith, who leads shareholder engagement efforts at
Walden Asset Management, which represents one of the filers of
the shareholder resolution, said investors planned to withdraw
it in response to the bank's action on Thursday.
Of the new bylaw, Smith said via e-mail, "We believe this is
a best governance practice and empowers the Board in its role of
overseeing management on behalf of investors."
It is common among the largest U.S. banks to combine the
chairman and CEO jobs, as at JPMorgan Chase & Co and
Goldman Sachs Group Inc, despite frequent pressure from
activists to break up the jobs in the wake of the stumbles.
Bank of America Corp split up the titles after the
financial crisis, then unilaterally changed its bylaws in 2014
to give CEO Brian Moynihan the chairman's title and held a
shareholder vote the following year that authorized the change.
A spokesman for Wells Fargo referred questions about the
bylaw change to public relations firm Sard Verbinnen, which
declined to comment.
(Additional reporting by Sruthi Shankar in Bengaluru)