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Last Trade - 07/05/21

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Market Cap £492.5m
Enterprise Value £491.5m
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Position in Universe 3231st / 6858

EXCLUSIVE-Wells Fargo CEO ruffles feathers with comments about diverse talent

Tue 22nd September, 2020 7:14pm
(Adds Black executives on operating committee)
    By Imani Moise, Jessica DiNapoli and Ross Kerber
    Sept 22 (Reuters) - Wells Fargo & Co  WFC.N  Chief Executive
Charles Scharf exasperated some Black employees in a Zoom
meeting this summer when he reiterated that the bank had trouble
reaching diversity goals because there was not enough qualified
minority talent, two participants told Reuters.
    He also made the assertion in a company-wide memo June 18
that announced diversity initiatives as nationwide protests
broke out following the death of George Floyd, an unarmed
African-American man, in police custody.
    "While it might sound like an excuse, the unfortunate
reality is that there is a very limited pool of black talent to
recruit from," Scharf said in the memo, seen by Reuters.
    Scharf spent more time listening than speaking during the
previously unreported 90-minute call which he initiated. His
comments about Black talent rubbed some attendees the wrong way,
according to the two employees, who spoke on the condition of
anonymity because they feared repercussions.
    Not all attendees recalled being offended. "The meeting was
incredibly constructive. ... I walked away being incredibly
surprised at how genuine and sincere he is," said Alex David,
president of the Black/African American Connection Team Member
Network. 
    But several Black senior executives across corporate America
said they are frustrated by claims of a talent shortage, and
called the refrain a major reason that companies have struggled
to add enough racial and ethnic diversity to leadership ranks,
despite stated intentions to do so.
    "There is an amazing amount of Black talent out there," said
Ken Bacon, a former mortgage industry executive on the boards of
Comcast Corp  CMCSA.O , Ally Financial Inc  ALLY.N  and
Welltower Inc  WELL.N . "If people say they can't find the
talent, they either aren't looking hard enough or don't want to
find it."
    Bacon said he was "shocked and puzzled" by Scharf's
comments.
    Wells Fargo spokeswoman Beth Richek defended Scharf's record
on diversity.
    The CEO of the largest U.S. bank employer has pledged to
double the number of Black leaders over five years and tied
executive compensation to reaching diversity goals. He is also
requiring hiring managers to consider diverse candidates for
high-paying roles that are vacant, and ensure diversity on
interview teams.
    Since Scharf joined the bank a little less than a year ago,
it has added two Black executives to its operating committee -
Lester Owens, head of Operations; and Ather Williams, head of
Strategy, Digital and Innovation.
    Wells Fargo's latest proxy disclosed more diversity data
than those of many other companies, including that two of 12
directors at the time were Black and one was "Latino/Hispanic."
 urn:newsml:reuters.com:*:nL1N2GB1UW
    Scharf "is committed to deep and systemic change to increase
diversity and has held several forums where there has been
candid conversation and unfiltered feedback," Richek said in a
statement. 
    
    "TALENT IS THERE"
    Introspection across corporate America during the Black
Lives Matter movement has cast a harsh light on the lack of
diversity.
    In boardrooms, African-Americans made up 10% of new director
appointments in the Fortune 500 last year compared with their
13% of the U.S. population, according to a 2020 report from
executive recruiting firm Heidrick & Struggles. New Hispanic
directors were even more scarce, the study found.
    Only 7.3% of the five highest-paid executives at financial
companies in the Russell 3000 were racial or ethnic minorities,
according to data from ISS ESG, an arm of the proxy-advisory
firm Institutional Shareholder Services. That number has risen
in recent years, yet remains far below the percentage of
minority groups in the general U.S. population.  urn:newsml:reuters.com:*:nL1N2GF011 
    Senior corporate executives and recruiters said the notion
of a shallow minority talent pool is frequently cited as a
hurdle to improving diversity but probably reflects insular
professional and social networks.
    Lauren Holland, who chairs a word-of-mouth professional
network called Wall Street Friends, said she has 8,000 members
in minority communities, and sent out more job posts to them in
the last two months than in the last five years.
    "I literally get emails every single day from people asking
to be added to our list," she said. "The talent is there. It's
just a matter of the firm accessing it and connecting with it."
    
    NOT ENOUGH PROGRESS
    Experts said one reason board rooms and C-suites lack
diversity is that such jobs are often filled by people who have
managed businesses, while many people of color have tended to be
stuck in roles that lack a direct connection to profits.
    "As women and minorities started to gain traction in
corporate America, they were trapped in certain jobs companies
felt comfortable placing them in, like human resources,
administrative-support type functions," said Teri McClure,
former general counsel and chief human resources officer at
United Parcel Service Inc  UPS.N , who sits on several boards,
including that of JetBlue Airways Corp  JBLU.O .
    McClure said she frequently hears comments like Scharf's
when companies have not tried hard enough to find diverse
candidates or give them the experience to qualify for senior
roles.
    Some Black directors and executives said they were unhappy
with the progress in improving diversity.
    "Unless I practically get on a soapbox about it and ask
about it every meeting, it gets pushed out," said Mary Winston,
a director at companies including Chipotle Mexican Grill Inc
 CMG.N , about some of her past work on boards. "It's just not
as robust a conversation as it should be, and no progress has
been made."
    Winston, adding that she is often the only person of color
in board rooms, also disagreed with the notion of a talent
shortage.
    One of the Wells Fargo employees said there simply was no
lack of talent: "I can get them 10 to 15 resumes today."

 (Reporting by Imani Moise, Jessica DiNapoli and Ross Kerber;
Editing by Lauren Tara LaCapra, Paritosh Bansal, David Gregorio
and Richard Chang)
 ((Imani.Moise@thomsonreuters.com; +13322191733;))
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