Wells Fargo has reclaimed an additional $75 million from its former CEO John Stumpf and Head of Community Banking Carrie Tolstedt, just as an independent investigation of the bank’s sales practices comes to a close.
Spurred by a lawsuit alleging Wells Fargo opened accounts in its customers’ names—without their consent—these latest clawbacks bring the bank’s total executive actions up to more than $180 million. The organization already reclaimed about $69 million from Stumpf and $67 million from Tolstedt.
The compensation actions are just one of the many steps the bank has taken in response to the lawsuit, as well as the investigation, which was conducted by Shearman & Sterling.
The bank has also: named Mary Mack and Tim Sloan as Tolstedt’s and Stumpf’s replacements, respectively; separated the roles of Chairman and CEO; changed company by-laws; appointed a new Chairman, Vice Chair, and various Board members; centralized its risk and human resource management systems; eliminated retail product sales goals; and implemented a new Community Bank compensation plan.
All in all, the investigation “identified a confluence of factors that led to the sales practices issues, which are being addressed by the Board and management.” It resulted in a 110-page report.
Among the issues cited were the Community bank’s performance management system and its sales culture; the larger organization’s decentralized structure, which afforded too much autonomy and authority to Community Bank leadership; the unwillingness of Tolstedt and other leaders to change the sales model or “recognize it as the root cause of the problem;” and Stumpf’s hesitancy to investigate or challenge the Community Bank’s sales practices.
“We fell short of the expectations we have of ourselves and the expectations our customers have of us,” Sloan said. Our problems are real and essential to fix. It will take time to repair mistakes and lead the company forward. We intend to strengthen our culture through our organization and ensure we are always doing the right thing for our customers. While there is much more still to be done, we have already begun a series of change that will help to rebuild trust.”
He also stressed the vision he has for the organization moving forward.
“We want Wells Fargo to be viewed as the lender of choice for first-time homebuyers, diverse communities, and low- to moderate-income communities,” he said.