Tim Sloan: The CEO Replacing Wells Fargo’s John Stumpf
The 29-year veteran takes over from John Stumpf, who retired after scandal
Wells Fargo, in the face of a sales scandal and federal investigations, replaced embattled CEO John Stumpf with longtime employee Timothy Sloan. WSJ’s Aaron Lucchetti joins Lunch Break with Tanya Rivero and explains whether the move will be enough to regain the public’s trust and appease lawmakers. Photo: AP
By Emily Glazer
Wells Fargo & Co.’s new chief executive has the right resume: 29 years at the bank, and none of them in its troubled retail unit.
Timothy J. Sloan rose through the commercial, corporate and investment banking side of a firm best known as a Main Street lender, helping with deals including the $15.4 billion crisis-era takeover of struggling Wachovia Corp. Now, he must show he can get a handle on the bank’s sprawling consumer business.
His tasks include fixing a reputation battered by revelations that staff signed customers up for as many as two million accounts without their knowledge to meet lofty sales goals. He will also have to navigate a raft of federal and state investigations, including from the Justice Department.
Mr. Sloan said in an interview with The Wall Street Journal Wednesday that he aims to improve the bank’s reputation by being “very focused” on addressing customers’ concerns, refunding customers for improper charges and ensuring the bank has the right products and services for them.
Mr. Sloan, 56 years old, took over immediately Wednesday from John Stumpf, who retired in the wake of the sales scandal and harsh criticism from lawmakers. The bank had groomed Mr. Sloan: A year ago, Wells Fargo named him president and chief operating officer, promoting him from head of the bank’s wholesale banking unit and earlier chief financial officer.
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On Monday, Wells Fargo had announced executive moves that cemented the position of a number of Mr. Sloan’s lieutenants. That same day, Mr. Sloan participated in an internal call with about 500 top executives that looked to lay out how the bank would try to put the scandal behind it.
“It’s going to be harder for a while, and we get that,” Mr. Sloan said, according to a recording of the call reviewed by The Wall Street Journal. The executive will quickly be on the firing line: He will lead the bank’s third-quarter earnings report Friday alongside Chief Financial Officer John Shrewsberry, one of his protégés.
Mr. Sloan hasn’t completely escaped the scandal. During his appearance before the Senate Banking Committee, Mr. Stumpf said Mr. Sloan earlier this year spoke with Carrie Tolstedt, then head of community banking, the unit responsible for the bad behavior. His mission: tell her that “we want to go in a different direction” with the business and its approach to problems in it.
This prompted Ms. Tolstedt to say she wanted to retire, Mr. Stumpf said. The bank agreed to this, though it did so even as it was preparing the settlement with regulators, according to people familiar with the matter. And this allowed Ms. Tolstedt to leave the bank with around $90 million in total compensation.
That became a point of contention during the Senate hearing. Asked repeatedly by Sen. Elizabeth Warren (D., Mass.) about the decision not to fire Ms. Tolstedt, Mr. Stumpf at one point demurred, saying, “Well, at the time she was reporting to our president and chief operating officer.”
About a week after the hearing, the bank’s board opted to claw back $19 million in compensation from Ms. Tolstedt. It also decided Mr. Stumpf would have to forfeit $41 million. Depending on the results from the board’s ongoing independent investigation, the executives—and others—could forfeit more.
Ms. Tolstedt, who is no longer with the bank, hasn’t returned requests for comment and previously declined to comment through a bank spokeswoman. Mr. Stumpf, through a bank spokesman, has declined to comment.
The pay decisions didn’t, however, affect Mr. Sloan, who lives with his family in a Los Angeles suburb and often commutes to Wells Fargo’s San Francisco headquarters during the week. A graduate of the University of Michigan, he joined the bank in 1987 as a vice president with its loan adjustment group. He worked his way up through jobs in units that made loans to big companies and handled real estate deals.
He was named chief financial officer in 2011 and head of wholesale banking in 2014. That side of the business serves corporate customers’ borrowing needs globally, as well as activities like commercial real estate, treasury services, investment banking and insurance.
While smaller than the consumer-banking operation, wholesale banking generated revenue in 2015 of about $25.9 billion, or about 30% of Wells Fargo’s total, and net income of about $8.2 billion, or 35% of the total.
Over the years, Mr. Sloan earned a reputation as an analytical numbers person whose advice was valued on deals. And he continued working on those even after becoming CFO, current and former executives said.
Mr. Sloan helped advise Burger King on its $11 billion merger with Tim Hortons in 2014, a deal that set off a political backlash against tax-saving “inversions” that relocated U.S. companies into lower-tax countries. After winning the advisory mandate, colleagues gave Mr. Sloan a paper Burger King crown that he kept on his desk.
Back in 2008, Mr. Sloan played a role in the bank’s purchase of Wachovia, helping decide which people and businesses would stay. More recently, he helped shepherd Wells Fargo’s acquisitions of about $50 billion in real-estate assets from General Electric Co.
“I always preferred when I had the alternative to pitch with Tim versus anybody else,” a former banker said. “People warmed up to him very quickly in the meeting.”
Mr. Sloan is said to be more relaxed than Mr. Stumpf or Mr. Stumpf’s predecessor, Richard Kovacevich, according to current and former executives. During presentations across the country, Mr. Sloan often steps off the stage to talk with employees without a script, microphone in hand.
This isn’t the first tough situation to face Mr. Sloan. The executive stepped in to the CFO’s role after the abrupt resignation of the former finance chief, Howard Atkins. The bank refused to provide an explanation for Mr. Atkins’s departure, other than later saying it was for “personal reasons.”
Unlike most of Wells Fargo’s U.S.-focused executives, Mr. Sloan has traveled globally in recent years, meeting with investors and clients in Europe, Australia and Asia, sounding out potential growth areas, according to current executives.
His focus now is domestic. And he already has the art for it. On the walls of his San Francisco office hangs an Edward Hopper-esque painting of a bank branch.
Write to Emily Glazer at email@example.com