Wells Fargo claws back $75 million from former CEO and top exec
NEW YORK — Wells Fargo is taking back another $75 million from its former CEO and another top executive, blaming them for playing central roles in the bank’s fake account fiasco.
The actions announced on Monday were the result of a massive, six-month investigation by Wells Fargo’s independent directors into the bank’s broken culture.
Wells Fargo’s board on Friday took back an additional $28 million from John Stumpf because the longtime CEO was “too slow to investigate or critically challenge” the bank’s sales tactics, the 110-page report said.
It also clawed back $47 million from Carrie Tolstedt, the former head of Wells’ community banks. Tolstedt and other bank leaders were “unwilling to change the sales model or recognize it as the root cause of the problem,” the board found. Directors said Tolstedt and other execs “resisted and impeded scrutiny or oversight” and even “minimized the scale and nature of problems.”
All told, Wells Fargo senior executives are returning $180 million in pay. The board report said it is among the largest corporate clawbacks ever.
“This exhaustive investigation identified serious issues in Wells Fargo’s decentralized structure and the sales culture of the community bank,” Wells Fargo Chairman Stephen Sanger said in a statement.
As part of the investigation, Shearman & Sterling lawyers hired by Wells Fargo’s board conducted 100 interviews of current and former managers, employees, directors and others and searched through 35 million documents. The lawyers also combed through hundreds of interviews of lower-level employees that were conducted by Wells Fargo.
Wells Fargo reached a $185 million with the government in September and admitted to firing 5,300 employees and creating some 2 million unauthorized accounts. The news set off a firestorm of criticism and led to more than a dozen investigations and lawsuits, the sudden retirement of Stumpf, and forced Wells Fargo to eliminate unrealistic sales goals that promoted cheating.
The Wells Fargo board said it has “total confidence” in the bank’s current management but pledged to maintain strong oversight and accountability going forward.
The scandal has put pressure on Wells Fargo’s board, too. Last week Institutional Shareholder Services, a shareholder watchdog group, recommended that Wells Fargo investors vote against the directors due to lax oversight.