Wells Fargo CEO John Stumpf wants to keep his job. Last week, Stumpf appeared in front of a Senate Committee hearing and was eviscerated by Senator Elizabeth Warren. Sen. Warren called Stumpf’s tenure proof of “gutless leadership.” Sen. Warren told him he should resign. Stumpf promised that a “board of directors” would decide whether or not the executives overseeing the massive fraud perpetrated by Wells Fargo would have “clawbacks” to their compensation packages. Yesterday, Wells Fargo announced a few financial punishments for executives.
Stumpf told employees in a memo that he offered to give up $41 million in unvested stock, which reflected his performance back to 2013, and the board accepted. Former community banking chief Carrie Tolstedt will forgo about $19 million in unvested stock, and agreed not to cash in outstanding options during the review, the lender said Tuesday in a statement. She has left the firm, after previously planning to retire at year-end. Neither Stumpf nor Tolstedt will get a bonus for this year.
Stumpf is set to appear tomorrow, once again, on Capitol Hill. The hope is that this slight sacrifice will appease lawmakers that these banks, and Wells Fargo in particular, should continue to police themselves. To remind you, Wells Fargo settled for a measly $185 million for defrauding billions out of millions of customers. Wells Fargo fired about 5,300 employees for perpetrating the fraud—but conveniently didn’t punish a single executive until now. There has been mounting evidence that not only should executives have known these frauds were taking place but that their “aggressive” sales plans created the environment that promoted such a massive fraud. While Tolstedt oversaw the sales field that opened millions of fraudulent accounts, she was set to receive around $124 million in stocks and bonds and other compensation. Losing $19 million is a lot, but not that much.
Warren said on Wednesday that she was not satisfied with Wells Fargo’s “small step in the right direction” because it was “nowhere near real accountability.”
"Wells employees who failed to meet management's outrageous sales goals were fired,” she said. “But John Stumpf is going to be just fine: He keeps his job and most of the millions of dollars he made while this massive fraud went on right under his nose.
Wells Fargo’s board of directors is docking about $60 million from employees (CEO and former executive already leaving) in order to buy some time. The “sacrifice” being made by Stumpf and Tolstedt is nominal.
The two executives are giving up only unvested stock awards. They each own millions of dollars worth of Wells Fargo stock outright, and Tuesday’s agreement does not call for the executives to lose any of that.
Tolstedt’s holdings, including stock and vested stock options, amount to about $77 million. Stumpf’s holdings add up to $109 million in stock, plus more than $24 million in accumulated pension and 401(k) benefits.
The Department of Labor announced it is reopening its Wells Fargo’s complaint file to review whistle-blower claims. I hope they investigate the [bleep] out of these guys.
