Wells Forego: The reviews were a bit better for Wells Fargo after CEO John Stumpf’s second visit to Capitol Hill in as many weeks. The pre-hearing sentiment on the Hill was a bit better than it had been for his earlier visit to the Senate Banking Committee. Preceding his Sept. 29 visit to a House banking panel the CEO, on Sept. 27, voluntarily agreed to return $41 million of unvested equity and to forego his 2016 salary during an independent board investigation. The investigation is expected to last into December, sources told The Wall St Journal.
Former community banking head Carrie Tolstedt will forfeit $19 million in unvested equity, the board said Sept. 27. In addition, the board issued a stern rebuke of Stumpf prior to the House hearing. After deflection and inactivity, it seems the board and Stumpf have begun to follow the route advocated in our pages, which held that the board needed to act quickly to open an investigation and that Stumpf should pledge to fix cultural problems at Wells ( PRN, Sept. 19). Despite the board and Stumpf having now taken several positive PR steps, the CEO continued to deny there was an “orchestrated effort” to blame for the alleged fraudulent activities of the 5,300 employees who were fired during the past five years over bogus accounts. In a second-best effort, the bank issued a statement late Sept. 27: “Our management team will cooperate fully and is dedicated to strengthening our culture and taking strong actions to ensure this conduct does not happen again.” On the Hill, Stumpf was more contrite than during his earlier appearance. “I am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members and to the American public,” Stumpf told the House committee. He added, “I want to apologize for not doing more sooner to address the causes of this unacceptable activity.” Both were excellent statements and the type of thing Stumpf should have said a few weeks ago. The takeaway: With the high-speed digital news cycle even small delays in framing your story and apologizing can be fatal. Despite the $41 million giveback, Stumpf’s future as CEO seems precarious.
Are You Ready? It’s only a blip now, a few stories here and there. Still, it seems the time may come when other banks, their CEOs and communicators will need to face accusations that their retail units did things similar to what Wells Fargo’s now-former employees are accused of having done. “Everyone did it,” a former retail banker said when we asked about the Wells Fargo bogus deposit and credit card accounts. Federal Reserve chair Janet Yellen was urged to look into similar practices at other large banks during a Sept. 28 House hearing. Rep. Stephen Lynch (D-MA) urged her to make bankers’ lives “hell…I would be amazed if this
practice was just limited to Wells Fargo.” The evidence seems more than anecdotal: SPGI and Wall St Journal analyses of the number of complaints received by the Consumer Financial Protection Bureau per billion dollars deposited in banks showed Wells Fargo was among the leaders, but other banks were close to or exceeded the number of complaints that Wells Fargo generated in the area of account management. While these figures prove nothing by themselves, the implications for financial communicators seem clear: Monitor the Wells Fargo communications strategy closely, ask questions internally now and have a plan of action ready should similar allegations touch your bank. Actually, having a crisis plan at the ready is good advice for brands in any industry. Nearly half (48%) of communicators in a Nasdaq Public Relations Services/PR News Pro survey said their organizations lacked a crisis communications plan ( PRN, March 28).
M&A: Tech specialist Hotwire PR of London acquired U.S. tech firm Eastwick. Both have been “unofficial partners for years and share very similar values, cultures and working practices…” Eastwick CEO Barbara Bates said Sept. 30. Bates and Heather Kernahan will remain as U.S. CEO and president, respectively.
People: Burson-Marsteller named former Cargill CCO Mike Fernandez as chair of its global corporate and financial practice. He’ll report to global CEO Don Baer. – In another
move to expand globally, WE Communications tapped Philip Channon for the new role of international COO. It also appointed Michael Murphy non-executive director international. Murphy will report to Alan VanderMolen, president, international and WE+. Channon will report to global CFO Corey Kalbfleisch and VanderMolen. – PRIME Research promoted Chelsea Mirkin and Julie Myers-Beach to VP, overseeing client research and administration, respectively. Mirkin joined PRIME in 2005, Myers-Beach in 2012. – Congrats to PepsiCo on the announcement that the Human Rights Campaign will present it with the HRC Corporate Equality Award Feb. 11 in NY. It recognizes PepsiCo’s commitment to equality for the LGBTQ community.