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Inside the Stagecoach
March 1, 2020

Wells Fargo’s new CEO: ‘We will get it done’

CEO Charlie Scharf has instilled the company with a sense of urgency in addressing its priorities.

Charlie Scharf
Wells Fargo CEO Charlie Scharf
Charlie Scharf
Wells Fargo CEO Charlie Scharf
Charlie Scharf
Wells Fargo CEO Charlie Scharf
Inside the Stagecoach
March 1, 2020

Wells Fargo’s new CEO: ‘We will get it done’

CEO Charlie Scharf has instilled the company with a sense of urgency in addressing its priorities.

Updated Nov. 30, 2020 | This story has been updated to include leadership changes and major company announcements.

Speaking at his first town hall in October 2019, one week into his role as Wells Fargo CEO, Charlie Scharf’s message for the company was clear: “We all have to demand more from each other. The seriousness of what we do brings tremendous responsibility. Our work has tremendous impact upon people. We need to recognize that and make sure that we're doing everything we can to operate the company to the highest standards of operational excellence.”

Since then, Scharf has focused on doing exactly that. He has put together a leadership team of executives from inside and outside of the company charged with doing the foundational work necessary to build the risk and control infrastructure appropriate for a company the size and complexity of Wells Fargo.

Scharf describes that as “the price of admission for what we do.”

“We all have to demand more from each other. The seriousness of what we do brings tremendous responsibility. Our work has tremendous impact upon people. We need to recognize that and make sure that we're doing everything we can to operate the company to the highest standards of operational excellence.” — Charlie Scharf

Building the right foundation

Scharf brings more than 24 years of leadership experience in the banking and payments industries to Wells Fargo, including CEO roles at Visa and Bank of New York Mellon. He has a demonstrated track record in leading change, driving results, strengthening operational risk and compliance, and innovating amid a rapidly evolving digital landscape. At Wells Fargo, Scharf has stressed urgency, accountability, and execution as what will drive the company forward. He has acknowledged the mistakes that were made in the past and has made addressing Wells Fargo’s regulatory requirements his top priority.

In February, Wells Fargo entered into agreements with the United States Department of Justice and the United States Securities and Exchange Commission to resolve these agencies’ investigations into the company’s historical Community Bank sales practices and related disclosures. As part of this resolution, Wells Fargo agreed to make payments totaling $3 billion.

As Scharf acknowledged, “At the time of the sales practices issues, the company did not have in place the appropriate people, structure, processes, controls, or culture to prevent the inappropriate conduct,” he said. “This was inexcusable.” While the settlements mark a significant step in bringing this chapter to a close, Scharf said there’s still more work to be done to rebuild the trust the company lost. “We are committing all necessary resources to ensure that nothing like this happens again, while also driving Wells Fargo forward,” he said.

Wells Fargo CEO Charlie Scharf stands behind a lecturn to address an audience of employees. A red silhouette of horses is in the background behind him on stage.
“The company was not prepared to prevent inappropriate conduct. This was inexcusable, and we must ensure such failings never occur again at Wells Fargo.” — Charlie Scharf

The focus on strengthening the company’s control environment goes beyond just meeting the expectations of its regulators. Scharf sees these changes as fundamental for the business going forward. “Meeting our regulatory requirements remains Wells Fargo’s top priority, because it builds the right foundation for all that lies ahead,” he said. “We recognize that what we want and what regulators want are not different. Our future depends on our ability to get this work done.”

A culture of accountability and operational excellence

Also foundational to the future are the cultural changes Scharf is leading at Wells Fargo. In his messages to the company’s employees, he has encouraged them to embrace candor, deliver on their promises by executing flawlessly, and always do the right thing. “Words are nice, but actions are what matter,” he said.

In his first week, Scharf also signed the Statement on the Purpose of a Corporation issued by the Business Roundtable, which acknowledges that businesses are responsible to a broad set of constituents including customers, employees, suppliers, and the communities in which companies operate. He said, “In order to be a great employer, a great and involved partner in the communities where we operate, and contribute in meaningful ways to the growth of the U.S., we must be guided by delivering for our customers every day in a manner that will make us and our stakeholders proud.”

Flatter structure for clearer responsibility and authority

In early February, Scharf unveiled a flatter organizational structure for Wells Fargo, designed to provide leaders with clear authority and responsibility. The new organizational structure has five principal lines of business, each with a CEO who reports directly to Scharf and is represented on the company’s Operating Committee.

As part of the reorganization, Scharf aligned control executives with each of the company’s businesses who will have a dual line of reporting to their respective CEOs and up through a separate operations team. This integrated operations organization is designed to enable the lines of business to work more collaboratively and consistently across the company while ensuring the right level of oversight.

He also announced an enhanced risk management structure with five line-of-business chief risk officers reporting to Chief Risk Officer Mandy Norton and a new head of the Operational Risk Management team.

“These changes create the right structure to build our businesses over the long term and increase our ability to successfully execute on our top priority, which is the risk, regulatory, and control work,” said Scharf.

Leadership overhaul

To help chart the company’s future, major changes have been made at the senior leadership level. Scharf has built a leadership team composed of executives from inside and outside the company who have deep financial services experience and have turned around and run complex financial institutions.

Scharf has also moved quickly to bring in a number of new senior leaders who have been tasked with making fundamental changes to improve the culture of the company. The additions include a new chief financial officer; chief operating officer; CEO of Consumer Lending; CEO of Wealth & Investment Management; head of Operations; vice chair of Public Affairs; lead control executive; general counsel, and head of the newly established Strategy, Digital & Innovation team.

Other hires have been made in key areas across the enterprise, including Cards, Retail and Merchant Services; Corporate Controller; Corporate Communications; Social Impact & Sustainability; Corporate Risk; Government Relations & Public Policy; Sales Practices Oversight & Management; Strategy and Operations Planning; and Technology.

Click or tap to learn about the new leaders at Wells Fargo >>

In addition to the changes made at the senior leadership level, the Board has focused on enhancing its composition, oversight, and governance practices. The Board has conducted a thoughtful, deliberate refreshment process. Over a majority of the Board’s independent directors joined the Board since January 2017, and the Board has rotated six of seven Board committee chair roles. As part of the process, Charles H. Noski was named Board chair on March 9. The retired vice chair and former chief financial officer of Bank of America joined Wells Fargo’s board in June 2019.

Investing in employees and expanding diversity and inclusion actions

Recognizing the criticality of employees in making the changes underway at the company successful, on March 4 Scharf announced that Wells Fargo will be raising the minimum hourly pay in a majority of its U.S. markets. Minimum pay will be tiered based on various factors, including the cost of living in different areas of the country, with the minimum hourly pay ranging from $15 to $20 depending on employee location. The pay increases go into effect in December 2020.

In October, the company announced significant investments to help make health care more affordable for its employees by lowering premiums, copays, and deductibles in many plans. For 2021, medical plan premiums will remain flat for almost 54,000 employees and will be lowered for more than 20,000 employees.

To help employees build their retirement savings, Wells Fargo recently announced a new base contribution of 1% of certified compensation that will be made to the 401(k) Plan accounts for eligible employees whose annual compensation is less than $75,000, which is in addition to the company’s matching contribution and a possible discretionary contribution.

Expanding diversity and inclusion actions

As the May 25 killing of George Floyd ignited calls for social justice around the world, Scharf announced a strengthened company commitment that would result in “meaningful change” toward its ongoing efforts to support diverse communities and foster a company culture that deeply values and respects diversity and inclusion.

On June 16, 2020, he announced goals to:

  • Increase Black and African American representation in senior leadership over the next five years
  • Expand diverse representation on the Operating Committee
  • Institute anti-racism training for all managers.
  • Directly tie compensation of Operating Committee members to improvement of diversity and inclusion in their areas of oversight.

In November, Kleber Santos joined the company as head of the newly created Diverse Segments, Representation and Inclusion, reporting directly to Scharf. The creation of this elevated role was one of several key initiatives Scharf announced in June 2020 as part of the company’s expanded commitments to diversity and inclusion.

Santos will be responsible for leading efforts to make the company a place where diversity is reflected at all levels and in every facet of the company’s operations, processes, and programs. He will be focused on creating a more diverse and inclusive working environment and partnering with Wells Fargo’s business leaders to deliver products and services specifically designed to meet the needs of diverse customer segments.

Wells Fargo has also announced its commitment to support a newly announced set of initiatives by the Business Roundtable focused on racial justice, equity, and efforts to create a more inclusive financial system.

Responding to the pandemic crisis

Scharf has led Wells Fargo’s far-reaching response to the COVID-19 crisis, including payment relief for millions of consumers, small businesses, and commercial customers; extra financial compensation for many employees, including those whose jobs require in-person services to customers; and a $23 million donation to the company’s WE Care Fund for employees who face financial hardship.

Under his leadership, the company has also helped nearly 194,000 businesses receive $10.5 billion in loans through the federal Paycheck Protection Program and donated approximately $400 million – its total gross PPP fee revenue — to nonprofits that assist small businesses. Among other moves, it donated $175 million to nonprofits that support communities and populations that are hardest hit by COVID-19 and thousands of grants to nonprofits that provide housing assistance the vulnerable populations.

“While the path to recovery from the pandemic is uncertain, the work in front of us is clear and demanding,” Scharf said. “Our No. 1 priority remains building out the risk and control environment that will ultimately allow us to meet our regulatory obligations. Nothing can or will stand in the way of this work.

“We must also do what it takes to become more efficient regardless of our operating environment, which will allow us to be a source of strength for customers, communities, and employees,” he added. “I know many have worked hard on these efforts, but we have not yet accomplished what’s required, and there is more difficult work ahead. To live up to our potential, we must all take part in making the cultural and structural changes needed.”

The opportunity ahead

While Wells Fargo is undergoing a tremendous amount of change, Scharf is quick to point out that it was his admiration for the company that led him to join as CEO, and he still sees the outstanding potential that lies ahead.

Part of the company’s potential lies in its ability to help customers achieve their own potential. An example of that can be seen in Wells Fargo’s recently introduced Clear Access Banking, a checkless account that helps customers avoid spending more than the amount available in their account without incurring overdraft or non-sufficient funds fees. It is designed for consumers seeking an account to help manage their spending, or who are new to banking, such as young adults. Clear Access Banking also has been certified by the Cities for Financial Empowerment (CFE) Fund for meeting its Bank On National Account Standards for safe and appropriate financial products that can help people enter or re-enter the mainstream financial system.

The account is part of Wells Fargo’s broader effort to simplify its products and services, and make banking convenient and easy to understand. The new offering is a way for the company to help satisfy the financial needs of more customers and further expand access to mainstream banking services, said Mary Mack, CEO of Consumer and Small Business Banking.

Earlier this year, the company also announced plans to provide access to a suite of credit products to Deferred Action for Childhood Arrivals (DACA) recipients, beginning this year and continuing into 2021. The efforts includes access to education loans, personal lines and loans, credit cards, auto loans, and small business credit. In addition, Wells Fargo will make mortgage and home equity loans to certain eligible DACA customers except where prohibited by specific investors. This expanded credit access was informed by ongoing engagement with the Mexican American Legal Defense and Education Fund (MALDEF), which helped give the bank valuable insight into the needs of young DACA individuals.

“I firmly believe we have a great future in front of us,” Scharf said. “We have a group of businesses that are the envy of the industry. We have great market positions in an industry that will continue to grow as we enable our customers to succeed financially. We can and will do the work necessary to create the right environment inside the company to allow us to grow successfully. We know we have some challenges in front of us. I feel very confident that we know what we have to do, and we will get it done.”

For more about the company’s progress, see “Wells Fargo: Charting a New Future” (PDF).

 

 


New leaders at Wells Fargo

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