Hoping to stem the bad publicity in the wake of its $185 million in fines for creating fake customer accounts, Wells Fargo & Co. announced that its board will launch a review and CEO John Stumpf will forego $41 million in stock.
Elizabeth Dexheimer of Bloomberg News had the news:
Former community banking chief Carrie Tolstedt has left the company, will forgo unvested stock valued at about $19 million, and agreed not to cash in outstanding options during the review, the San Francisco-based lender said Tuesday in a statement. Neither Stumpf nor Tolstedt will receive a bonus for this year.
“We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the company’s business are conducted with integrity, transparency and oversight,” Stephen Sanger, the board’s lead independent director, said in the statement. “We will proceed with a sense of urgency but will take the time we need to conduct a thorough investigation.”
The bank is under pressure to show it’s holding leaders accountable before Stumpf appears before the House Financial Services Committee on Thursday, after government investigations found evidence that branch employees created millions of sham accounts over half a decade. The CEO faced withering questions from lawmakers on both sides of the aisle during a Senate hearing last week, including calls from Elizabeth Warren for his resignation.
Emily Glazer of The Wall Street Journal reported that the bank is also clawing back $19 million from a former executive:
Ms. Tolstedt became a point of focus at the Senate hearing because she oversaw the bank’s retail-banking operations during the time in which regulators allege “widespread illegal” practices took place. She stepped down from her role in July and was set to retire at year-end. Wells Fargo said Tuesday that Ms. Tolstedt has now left the bank.
Her total compensation, including accumulated stock and options earned over her 27 years at the bank, could run to about $90 million, according to a letter Wells Fargo sent senators last week. Ms. Tolstedt received total compensation for 2015 of $9.05 million.
Wells Fargo has been in the hot seat since news spread that as many as two million unwanted or fictitious customer accounts were opened by its employees to meet sales goals. The bank this month entered into an enforcement action and paid a $185 million settlement to two regulatory agencies and the Los Angeles City Attorney’s office.
Tom Huddleston of Fortune reports how late-night show host John Oliver eviscerated the bank:
Oliver laid into the bank for opening the fraudulent accounts while leaving customers in the dark. “Hidden fees are bad enough without being hidden inside hidden accounts with hidden PIN numbers made with hidden email addresses—because that’s like a Russian nesting doll where the last doll is giving you the middle finger,” Oliver said.
Where did Wells Fargo employees get the idea to take these fraudulent actions? Oliver highlighted the bank’s “incentive compensation program,” which highly incentivized employees to open as many new accounts as possible.
“All this is a little surprising, given that the bank’s CEO, John Stumpf, has talked a big game about decency and integrity,” Oliver said before showing a clip from a video interview Stumpf did with Fortune in 2015, in which he said “the DNA of leadership is trust.”
Last Week Tonight then turned to Stumpf’s recent grilling on Capitol Hill, where the Wells Fargo CEO showed up with a conspicuous bandage on one hand—”which I legally can’t say is the result of carpal tunnel from typing in so many fake email addresses,” Oliver joked.