Elizabeth Warren is not satisfied by Wells Fargo’s decision to rescind executives’ pay
Warren called the millions forfeited by top bank executives "piecemeal measures."
Following last week’s public lashing by Sen. Elizabeth Warren, among others, Wells Fargo announced Tuesday that CEO John Stumpf would forfeit $41 million in the wake of allegations that the bank opened millions of fraudulent customer accounts.
The banking giant said it was one of a number of steps taken to “promote accountability” following the scandal. Warren, however, is hardly satisfied.
“This is a small step in the right direction, but nowhere near real accountability,” the Massachusetts senator said in a statement Tuesday, which was subsequently posted on social media.
.@WellsFargo employees who failed to meet management’s outrageous sales goals were fired.
— Elizabeth Warren (@SenWarren) September 28, 2016
.@WellsFargo employees who tried to sound the alarm about the creation of fake accounts were fired. Their lives turned upside down.
— Elizabeth Warren (@SenWarren) September 28, 2016
.@WellsFargo CEO Stumpf will be just fine: he keeps his job & most of the money he made while massive fraud went on under his nose.
— Elizabeth Warren (@SenWarren) September 28, 2016
In addition to the money forfeited by Stumpf—which the Wall Street Journal reports represents a quarter of his total compensation during his near-35 years at the bank—the firm said he will receive no bonuses for 2016 and will forfeit all salary while an internal investigation takes place.
But Warren said that’s nothing compared to the price paid by the employees who were fired.
“As I said last week, Mr. Stumpf should resign, return every nickel he made while this scam was ongoing, and face SEC and Department of Justice investigations,” she said. “That is real accountability.”
Wells Fargo says it fired 5,300 low-level workers for the unauthorized behavior, which the bank says began in 2011, though some reports say it started even earlier than that. The bank also paid $185 million in penalties to the government.
In last week’s Senate hearing, Warren questioned why no senior-level executives were being held responsible for the scandal and said it was “gutless leadership” by Stumpf, who earned more than $19 million in 2015.
Wells Fargo also said Tuesday it would recoup $19 million from former executive Carrie Tolstedt, who was the head of Wells Fargo’s retail banking and retired in July shortly before the scandal was fully brought to light. The company perhaps caught the most fire from senators last week for not utilizing its “clawback” policy to recoup all or some of the $125 million in retirement compensation received by Tolstedt.
CNN reports Tolstedt could still walk away with $77 million in Wells Fargo shares and stock options.
Warren followed up her statements with a letter Wednesday afternoon to Steven Sanger, the director of the Wells Fargo’s internal investigation.
In the letter, she noted that Stumpf’s stock holdings increased $200 million in the years the fake account scandal occurred, belittling the concessions made Tuesday by the CEO and Tolstedt.
The reduced compensation represent only a fraction of the total pay and bonuses received by Mr. Stumpf and Ms. Tolstedt during the years that their compensation was based in part on inflated retail account growth and cross-selling success. Moreover, these piecemeal measures do not represent a true clawback in the sense that they do not recoup earlier compensation or vested stock awards. Instead, they merely disqualify these senior executives from this year’s future bonus – which may well be nominal, given the company’s poor stock performance to date in 2016 – and unvested equity awards.
Echoing Warren, Sen. Sherrod Brown, the Democratic ranking member on the Senate’s banking committee, said Wednesday the move was “a step in the right direction,” but left many unanswered questions regarding the treatment of customers and employees.
Wells Fargo is also facing a “top-to-bottom” Labor Department review of possible workplace violations.
To comment, please create a screen name in your profile
To comment, please verify your email address
Conversation
This discussion has ended. Please join elsewhere on Boston.com