Last November, Wells Fargo (NYSE:WFC) announced a sweeping overhaul of its C-suite, shifting power away from chairman and CEO John Stumpf and toward his heir apparent, president and chief operating officer Tim Sloan. And on Monday of this week, the bank further consolidated control under Sloan's leadership.
If you get the chance, I encourage you to read the latest press release issued by Wells Fargo. It's a textbook example of how embattled companies disguise their true intentions in times of trouble.
Let's start with the headline: "Wells Fargo Forms New Business Group Focused on Payments, Virtual Solutions and Innovation."
Who would want to read a press release about that?
Total snoozer, right?
And that's the point.
Because if you click on the press release and engage your brain -- which, evidently unbeknownst to Wells Fargo, many of us are capable of doing -- what you see is a material reshuffling of Wells Fargo's executive ranks and reporting structure.
When The Wall Street Journal reported the news yesterday, here's how the paper's Emily Glazer interpreted the bank's announcement:
Wells Fargo & Co. announced Monday that it is shuffling a number of top executives even as the bank continues to grapple with the fallout from its sales-tactics scandal.
The moves allow President and Chief Operating Officer Timothy J. Sloan to cement the position of a number of his lieutenants, according to people familiar with the bank. Mr. Sloan is widely expected to take over for Chief Executive John Stumpf in the next two years, these people said.
I don't know about you, but I don't see anything in there about payments or these mysterious virtual solutions referred to in the headline of the press release. Glazer talks about these things later in the article, but that information is very clearly of secondary importance.
The most important thing to note from the press release is that Wells Fargo is positioning Sloan to take over, and probably sooner rather than later.
Following the reshuffle, here's who will report to him:
- Mary Mack, head of Community Banking
- Perry Pelos, head of Wholesale Banking
- David Carroll, head of Wealth and Investment Management
- Franklin Codel, head of Consumer Lending
- Avid Modjtabai, head of Payments, Virtual Solutions and Innovation
See the first three people on the list?
They run Wells Fargo's three customer-facing operating segments. And while they were placed under Sloan last November -- presumably and conveniently right as the bank was coming to terms with the magnitude of its fake account scandal -- the addition of two more direct reports under Sloan signals the bank's succession plan.
For all intents and purposes, then, Stumpf no longer exercises direct control over the bank's day-to-day operations. What control he does exercise is now indirect, via Sloan, who still reports to Stumpf.
That's probably a good thing when you consider that Stumpf supported the bank's decision to fire 5,300 low-level employees who, if countless reports are to be believed, were all but physically forced to commit fraud in order to ply their customers with at least eight financial products, whether the products were good for customers or not.
Because eight rhymes with great.
That's how Stumpf sets strategy.
Editor's note: This article originally said that Stumpf's direct control over Wells Fargo's three operating segments was handed to Sloan this week. The transfer of power actually occurred last November. The announcement this week gave Sloan additional direct reports. Starting next month, Sloan will now oversee six members (including himself) of the bank's 12-member operating committee. The other six members, none of whom operate a business line for the bank, report to Stumpf.