On Monday Wells Fargo released the results of its internal investigation into its retail banking sales practices and announced it will take back $75 million more in compensation to its former CEO and another executive, bringing the total clawbacks to $180 million.
Late last year, Wells Fargo was fined $185 million for a fake account scandal, where more than 5,000 of the bank’s former employees opened more than 2 million potentially unauthorized accounts to get sales bonuses.
The bank began taking action, including revoking 2016 bonuses for its top executives, firing four senior managers in February, outing another two executives in March and splitting the role of chairman and CEO. The company even prepared a new pay plan where employee compensation is no longer tied to sales.
After the scandal came out, the company’s now-former CEO even announced his sudden plan for retirement, saying “My immediate and highest priority is to restore trust in Wells Fargo.”
Now, the company has announced the results of an independent investigation begun in December. The results show cultural, structural and leadership issues were the root cause for its improper sales practices.
As a result, the bank's total clawback amount will be more than $180 million. Former CEO John Stumpf will be forced to pay back $69 million, while former head of community banking Carrie Tolstedt will pay back $67 million. These amounts include previously forfeited unvested equity awards of $41 million for Stumpf and $19 million for Tolstedt, leaving the additional clawback amounts at $28 million and $47 million respectively.
For the investigation, law firm Shearman & Sterling conducted 100 interviews of current and former managers, employees, members of Wells Fargo’s Board of Directors and other relevant parties and searched more than 35 million documents. In addition, the firm reviewed the product of hundreds of interviews of more junior employees conducted by or on behalf of Wells Fargo. Shearman & Sterling also reviewed information concerning more than 1,000 investigations of lower-level employees terminated for sales integrity violations, which Wells Fargo’s Internal Investigations group conducted.
“This exhaustive investigation identified serious issues related to Wells Fargo’s decentralized structure and the sales culture of the community bank, all of which the board and management have been working diligently to rectify,” Chairman of the Board Stephen Sanger said. “In addition to the progress we’ve already made to fix these issues, the Board has taken significant employment actions and executive compensation actions totaling over $180 million.”
“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 board has total confidence in management, and while this investigation has concluded, our oversight of the company and commitment to accountability are stronger than ever.”
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