Two prominent alumni of the University of Michigan’s Ross School of Business have been named to fill the leadership void created at Wells Fargo & Co. when former CEO and Chairman John Stumpf resigned earlier this month amid scandal. Timothy Sloan, who earned his MBA from Ross in 1984, has been named as the bank’s next CEO. Stephen Sanger, a 1970 alumnus of the Ross MBA program, has been named as its chairman.
Sloan is a 29-year veteran of the San Francisco–based Wells Fargo, having served as president and chief operating officer since November 2015 and having worked in or run most of the bank’s departments at some earlier point in his tenure. Sanger has been on the Wells Fargo Board since 2003 and has served as its lead director since 2012. He served from 1995 to 2007 as CEO of General Mills, Inc. and until 2008 as its chairman.
Although long expected by many to be Stumpf’s eventual successor, Sloan steps into the role at a challenging time for the bank, which is under investigation and charges that it took advantage of customers to meet sales targets, opening as many as 2 million accounts without customers’ knowledge or approval. Last month, Wells Fargo agreed to pay $185 million to settle some of those charges and required Stumpf to forfeit $41 million in outstanding stock awards and forego a 2016 bonus. Earlier this month, Stumpf announced his retirement.
Then lead independent director, Sanger last month announced that the Wells Fargo board was launching an independent investigation into the retail banking sales practices under which the fraudulent accounts were opened. “We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the company’s business are conducted with integrity, transparency and oversight,” he said in a September 27th statement, which also announced the $41 million in clawbacks for Stumpf. Sanger went on to say that the board could take further action based on the findings of the investigation.
But in the October 12th Wells Fargo statement announcing Stumpf’s retirement and Sloan and Sanger’s appointments to CEO and chairman, no direct mention of the scandal was made. Sanger stated simply: “John Stumpf has dedicated his professional life to banking, successfully leading Wells Fargo through the financial crisis and the largest merger in banking history, and helping to create one of the strongest and most well-known financial services companies in the world. However, he believes new leadership at this time is appropriate to guide Wells Fargo through its current challenges and take the company forward.”
New Wells Fargo Leadership Has Deep Ties to Ross
Sloan and Sanger both have deep ties to Ross. Sloan is a member of the school’s advisory board, and Sanger and his wife Karen made a $20 million gift last year to establish the Sanger Leadership Center. Among other things, the Sanger Center helps to promote what the school has coined as the “Michigan Model of Leadership,” which is based on four key values of empathy, drive, integrity and courage.
In an article in the Washington Post following his appointment as CEO, Sloan acknowledged the challenges he faces. “While I am confident in my ability to be successful in the role, it is a new role,” he told the Post. “We have a reputation we need to repair,” he continued.
Wells Fargo, it would seem, is banking on Sloan’s own reputation in the industry to help repair the reputation of the tarnished company. “The Board of Directors has great confidence in Tim Sloan,” Sanger said in a statement. “He is a proven leader who knows Wells Fargo’s operations deeply, holds the respect of its stakeholders and is ready to lead the company into the future.”
Others in the industry share the board’s confidence in Sloan. “When he was CFO, he clearly became one of the most public and highly thought-of people at Wells Fargo,” Scott Siefers, a bank analyst at Sandler O’Neill & Partners told Bloomberg last year when Sloan was promoted to president. “He’s very well known already, very well respected in the investment community. And he’s got a great deal of breadth and depth in terms of his knowledge of the company,” Siefers added.
