Wells Fargo Promotes Sloan, Positioning Him as Likely CEOby
`It establishes a succession plan,' says analyst Marty Mosby
There are `other viable candidates' too, bank spokeswoman says
Wells Fargo & Co., the most valuable U.S. bank, promoted Timothy Sloan to chief operating officer and president, giving him authority over more businesses and positioning him to someday lead the company.
Sloan, who runs wholesale banking, will now also supervise heads of other key divisions -- community banking, consumer lending and wealth and investment management -- the San Francisco-based firm said Tuesday in a statement. His 28 years at the lender already included stints as chief financial officer and head of administration.
“As we prepare for Wells Fargo’s future, Tim is an ideal choice to lead one of the best teams in banking as they accelerate investments and drive change,” Chairman and Chief Executive Officer John Stumpf, 62, said in the statement.
While Sloan, 55, has long been seen as a potential CEO successor, his elevation Tuesday was faster than expected, said Marty Mosby, an analyst at Memphis, Tennessee-based Vining Sparks. The move telegraphs to investors that Wells Fargo is grooming future leadership, and in the meantime, it relieves some pressure on Stumpf, who won’t reach the company’s mandatory retirement age for three more years.
“It establishes a succession plan,” Mosby said. And for Stumpf, “holding all those jobs without anybody else having a part of that umbrella in a national franchise of this magnitude is tough sledding.”
Not Only Candidate
Stumpf served as operating chief and president for almost two years before becoming CEO in 2007. The bank’s retirement rules for senior executives require him to step down as CEO by the end of 2018, the year in which he turns 65, unless the board’s human resources committee says he should stay on because of special or unique business circumstances, according to a regulatory filing.
Tuesday’s announcement puts Wells Fargo ahead of most other big U.S. banks in signaling who may someday take charge. Still, the promotion doesn’t mean he’s the only potential successor, said Arati Randolph, a company spokeswoman.
“In Wells Fargo’s recent history, the naming of a president and COO has played an important role in the company’s overall succession plan for the CEO role,” she said. “However, the company’s succession plan does include other viable candidates.”
The bank’s shares were little changed in extended trading as of 5 p.m. in New York. The stock has climbed 2.8 percent during the past year to $54.96, giving the lender a total market value of $281 billion.
Sloan took the CFO post in February 2011, and during his tenure there, the firm reported three straight years of record annual profits. The company put him in charge of wholesale banking in May 2014. He also has led operations such as commercial banking, commercial real estate and specialized financial services.
“When he was CFO, he clearly became one of the most public and highly thought-of people at Wells Fargo,” said Scott Siefers, an analyst at Sandler O’Neill & Partners. “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.”
The bank prides itself on predictability in leadership, said Greg Donaldson, chairman of Donaldson Capital Management in Evansville, Indiana, which oversees about $1.2 billion including the lender’s stock.
“Wells Fargo loves to get the decisions made and out of the way so that everybody in the whole store, from Wall Street to some place in North Dakota,” knows who the next leader is going to be, he said.