Former CEO John Stumpf, who left the bank in October, will pay an additional $28 million, while the former head of community banking, Carrie Tolstedt, will return $47 million in stock options on top of the $19 million she agreed to pay back after stepping down past year, according to a report by the Wells board of directors.
The report says all this starts with the corporate culture and an oft repeated mantra “run it like you own it”.
“The community bank identified itself as a sales organization, like department and retail stores, rather than a service-oriented financial institution”, according to the report.
Branch-level managers said they often felt pressure from their supervisors to make sales, but that only rarely were they explicitly instructed to engage in misconduct. Last month, Mack restructured the community bank’s leadership. As for firing Tolstedt, though, he said he never even considered it. It recommended that the bank claw back $47.3 million that she had received in stock options, on top of $19 million it had previously taken away.
“When you violate your code of ethics at Wells Fargo, you don’t have an opportunity to come back”, said Sloan, 56.
The report was unrelenting in its criticism of Stumpf and Tolstedt, saying that both, when presented with the growing problems in Wells’ community banking division, were unwilling to hear criticism or consider changes in behavior.
Mary Mack: The report only mentions the former Wells Fargo brokerage chief one time – as Tolstedt’s replacement.
Wells Fargo has slashed another $75 million in pay for two former executives connected to its fake accounts scandal, the company said Monday as it released the results of its own investigation. And Stumpf and Tolstedt are only giving up a fraction of the $280 million and $100 million they earned, respectively, between 2011 and 2016, critics note. The company will “continue to review the report and incorporate its key findings”, he said. Of the four-Elizabeth Duke, Donald James, Hernandez, and Stephen Sanger (who is now the Wells chairman)-only Duke joined the board after the scandal (in 2015).
In addition to clawing back compensation from Stumpf and Tolstedt, the bank on February 28 reduced compensation for eight current executives by $32 million, including eliminating 2016 bonuses and halving 2014 performance payouts.
In the call with reporters, Sanger highlighted other actions taken by the bank, including the elimination of the sales goals that helped produce the scandal.
The board’s report, which praised the changes the bank had made since the sales scandal erupted into public view, is unlikely to quell the bank’s critics.
The report was the culmination of a six-month investigation by the bank’s independent board members and comes as Wells Fargo struggles to move beyond the sales scandal. Witnesses told Wells Fargo investigators that Conboy encouraged bankers to sell duplicate accounts regardless of customer need.
For instance, the report said that in the summer of 2002 “almost an entire branch” in Colorado was found by Wells Fargo internal investigations to have engaged in improper sales tactics, including unauthorized debit cards.
Some employees went to dizzying lengths to meet the sales goals. There were similar large-scale terminations for such conduct over the next decade, the report said, yet top executives repeatedly failed to look at what the root problem might be.
Better Markets, a left-leaning group that wants stricter regulations on banks, called the report “grossly deficient” and said it was “too little, too late”.
He later boasted of even higher numbers, such as 6.17 in 2014 – as Sen.
Stumpf, meanwhile, was overly deferential to Tolstedt, the report found, and to the bank’s longstanding focus on cross-selling, which required employees to sell multiple services to individual customers. It has been under investigation by the Securities and Exchange Commission because of its practices.
So far, Shearman & Sterling has found no evidence of retaliation, according to Stuart J. Baskin, a partner at the firm.
“I don’t think this is a chapter that is over with”.