In a scathing 113-page report, released last Monday, Wells Fargo’s Board of Directors described its former chief executive as a tone-deaf leader who protected an irresponsible lieutenant and worked for board members who didn’t keep the pair in check. According to The New York Times, the report stated that then Chief Executive John Stumpf and then lieutenant, former retail-bank chief Carrie Tolstedt’s behavior was so reprehensible that it decided to claw back an additional $75 million from the pair in the form of pay and incentives.
Largest Claw Back for Financial Firm
The latest decisions on pay brought the total money clawed back from current and former Wells Fargo executives to $182.8 million, an amount that rivals the fine the bank paid last year and that its board described as the largest claw back ever for any financial-services firm.
The report, the result of a more than 6-month investigation, is likely to be the board’s final deep dive into the questionable conduct that dated back to 2002 and ultimately resulted in Wells Fargo paying a $185 million penalty last year. It likely won’t be the final discussion, however, of the high-pressure sales strategy that led to as many as 2.1 million accounts being created using fictitious or unauthorized customer information. The San Francisco-based bank continues to face federal and state investigations about its sales practices.
The report also highlighted how the bank’s push to boost revenue and profit trickled down to thousands of employees who felt pressured to meet unrealistic sales goals. One Wells Fargo branch manager, for example, had a teenage daughter with 24 accounts, an adult daughter with 18, a husband with 21, a brother with 14 and a father with four.
While retail banking Chief Carrie Tolstedt “strongly” disagrees with the report’s findings, she was singled out 142 times in the report for setting the tone in the troubled retail-banking unit. There’s “no evidence that Tolstedt showed serious concern about the effects of improper sales practices on Wells Fargo’s customers,” the report added.
In response to the investigation findings, the board decided last week to claw back Ms. Tolstedt’s outstanding stock options valued at about $47.3 million, in addition to $19 million in earlier claw back activity. It also is taking away—through scheduled retirement benefits—an additional $28 million of incentive compensation paid to Mr. Stumpf in March 2016 on top of $41 million in earlier claw backs.