Wells Fargo chops execs' pay $75 million more: accounts scandal
- Author: Salvatore Jensen Apr 12, 2017,
Apr 12, 2017, 11:26
Regional managers were imploring their bosses to drop sales goals, saying they were unrealistic and bad for customers. That was the year the Los Angeles Times published a landmark investigation on Wells Fargo's sales culture.
The aggressive sales culture dated back at least 15 years, much longer than previously thought, the report said.
"Community bank leadership resisted and impeded outside scrutiny or oversight and, when forced to report, minimized the scale and nature of the problem", the report said".
"We accept the Board's findings as a critical part of our journey to rebuild trust", Sloan said in a statement Monday.
In the report, Tolstedt, who was head of the Community Bank, was described by the board as "insular and defensive".
To maintain the sales model, management exerted "significant and in some cases extreme, pressure on employees to meet or exceed their goals" and were anxious about losing their jobs if they didn't meet those levels, the report said.
Wells Fargo released the results Monday of its independent investigation of the company's fake accounts scandal.
The investigation report depicts the board as nearly entirely supine as Stumpf and his management team obfuscated and tried to explain away emerging information about the bogus account scandal-some of which cropped up even before The Times' article.
Stumpf and former retail bank leader Carrie Tolstedt will forfeit more of their pay in the wake of the investigation. The $28 million that the board is taking back from Stumpf - the proceeds of a 2013 equity grant - will be deducted from his retirement plan payouts, Sanger said. His questions cover a wide range of subjects, from how much those in various positions at the bank get paid to what steps the bank has taken to repay those affected by the sketchy sales practices.
Two influential advisory firms have also recommended significant changes to the company's board. The board did not know Wells had fired 5,300 employees for unethical sales practices until it came out in news reports.
On March 1, the board announced the bank's top eight executives will not receive cash bonuses for fiscal 2016. Investors who are keeping close eye on the stock of Wells Fargo & Company (NYSE:WFC) established that the company was able to keep return on investment at - in the trailing twelve month while Reuters data showed that industry's average stands at 0.00 and sector's optimum level is 0.41.
Sarwal said the report puts a spotlight on the fact that all corporate lawyers, both in house and at law firms, face a tension between advising their client on a specific matter, and advising them on how to run their business.
The report said that, "many employees believed that their future at Wells Fargo depended on how many products they sold".
"For GCs, this report is just another reminder that your job involves trying to change a real culture of human beings", said Sarwal.
The bank's former chief executive, John Stumpf, was notified of a problem at one of the bank's Colorado branches in 2002 that led to "mass termination" of bank employees, according to the report.
He later boasted of even higher numbers, such as 6.17 in 2014 - as Sen.
ELIZABETH WARREN: This is about accountability.
Wells Fargo acknowledged in its report Monday that it had profited by dipping into customers' authorized accounts to collect fees for the bogus accounts it created.
Sanger said that the board's report on Monday concluded almost all of its investigation and that no further terminations or compensation clawbacks are expected.
The bank remains under investigation in several states, as well as by the Securities and Exchange Commission, for its practices.
Several employees were fired or resigned but not all of them, the report found.
So far, Shearman & Sterling has found no evidence of retaliation, according to Stuart J. Baskin, a partner at the firm.
"Despite the clawback, I still feel that Stumpf is getting off easy", said Sarah Anderson, global economy project director for the Institute for Policy Studies, a social justice think tank.