Wells Fargo has admitted to perpetrating a fraud that includes the creation of millions of fake credit card and banking accounts. They’ve agreed to pay out a paltry $185 million and have promised to have fired 5,300 employees who are well below the pay grade of executive. CEO John Stumpf went in front of a Senate Committee to give his bullshit sorry/not sorry defense, where he took responsibility for saying he took responsibility. But one thing CEO John Stumpf and the rest of the Wells Fargo executives will have to worry about is losing their own personal stash of cash. That’s because the “board of directors” that makes decisions concerning executive compensation is made up of executives who have been or hope to soon be in the same boat. Called “claw back,” the idea is that this group of executives will somehow claw back on compensation packages when executives have either not earned those compensation packages or … I don’t know, broken the law?
This is a common situation, and it helps explain why executive compensation has inflated in recent decades. Corporate CEOs sit on one another’s boards and approve oversized pay packages, in the expectation that they will get the same treatment from their board in return. Some, like Stumpf, serve as both the CEO and board chairperson simultaneously.
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In addition to the millions bestowed upon them by their own boards, these current and former CEOs receive a generous stipend for being on the board of Wells Fargo. According to the company’s most recent proxy statement, in 2015 Chen made $279,027; James made $293,027; Sanger made $382,027; Dean made $346,027, and Engel made $331,027. The majority of those payments came in the form of stock as well.
So don’t hold your breath, as Carrie Tolstedt, the executive who most directly oversaw the fraud, is set to make $125 million in compensation and Wells Fargo has not said anything to make it seem like that has changed. Here’s a GIF of the executive board of directors.