Wells Fargo'sboard said it clawed back an additional $75 million in stock awards from former CEO John Stumpf and former community bank head Carrie Tolstedt, as a report released Monday put blame for a massive sales scandal largely on top executives in the community bank.
Last year, Wells Fargo was caught creating millions of unauthorized accounts to meet unrealistically high sales goals.
The 110-page report prepared by four of the bank's independent directors and by independent law firm Shearman & Sterling cited a "distortion of the community bank's sales culture and performance-management system, which, when combined with aggressive sales management, created pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorized accounts". This is in addition to what was taken away from the executives a year ago: $41 million in stock from Mr. Stumpf and $19 million of stock from Mrs. Tolstedt.
The board is also clawing back Ms. Tolstedt's outstanding stock options worth about $47.3 million, following $19 million in earlier clawback activity. With the report's publication, the board yanked even more pay from John Stumpf and Carrie Tolstedt, and the latter was retroactively fired.
But still, not everyone is convinced this is enough.
The report comes ahead of Wells Fargo's April 25 annual meeting, where board members are facing the risk of a shareholder revolt.
According to the report, multiple board members felt misled by a presentation by Tolstedt and others to the board's risk committee in May 2015. "Tolstedt effectively challenged and resisted scrutiny both from within and outside the Community Bank".
For example, when the scandal first broke, Wells said it had fired roughly 5,300 employees as a result of the sales practices, the vast majority of them rank-and-file employees. The bank fired about 5,300 low-level workers when the scandal came to light.
The report included interviews with 100 current and former employees and the examination of 35 million documents into the long-simmering problems at the bank that executives failed to confront despite clear and mounting evidence of a widespread problem.
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The report criticized the board for not centralizing risk functions at the bank earlier, not requesting more detailed reports from management and not insisting Stumpf get rid of Tolstedt sooner. In September, Wells Fargo reached a $190 million settlement with the OCC and other regulators over its opening millions of accounts in customers' names without their permission. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,600 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy.
Tim Sloan, who replaced Stumpf as CEO, was described in the report as having little contact with sales practices at the bank before becoming chief operating officer and Tolstedt's boss in November 2015. In July 2016, he informed her that she would no longer would lead the community bank and would retire, the report says.
"The trust customers, employees and investors place in Wells Fargo is paramount, and our work to rebuild and strengthen those relationships continues in earnest", Sanger said.
The bank's corporate structure gave too much power to the community bank's senior leadership, who the report concluded were "unwilling to change the sales model or even recognize it as the root cause of the problem".
Tolstedt's current perspective isn't represented in the report - its authors say she "declined, on advice of counsel, to be interviewed as part of this investigation".
Her department saw itself as a "sales organization, like department or retail stores, rather than a service-oriented financial institution", the report said.
If "customers believe that Wells Fargo team members are not conducting business in an appropriate and ethical manner", the report read, "it will result in loss of business and can lead to diminished reputation in the community".
The report, which was approved by all the board's independent directors, didn't call for any other top-level clawbacks or terminations. On Monday afternoon, Wells Fargo was trading down 0.33% to $54.66.
But doubles by Joey Votto and Eugenio Suarez provided a run for the Reds in the fourth as they cut the Cardinals' lead to 2-1. Wacha was efficient for most of his outing, getting through the first and third innings with a combined 13 pitches.
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Requiring urban water suppliers to prepare water shortage contingency plans, including a drought risk assessment every five years. Water is life for California's $47 billion farming industry, which grows almost half the nation's fruits, nuts and vegetables.
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