SAN FRANCISCO–Wells Fargo said it intends to “claw back” another $75-million in compensation paid to two former executives who are being faulted for the account opening scandal at the bank.
Wells Fargo’s board said it will seek to force former CEO John G. Stumpf and former head of community banking Carrie L. Tolstedt to repay the $75 million they were paid in compensation and stock. If successful, it would be one of the largest clawbacks in corporate history in the U.S.
The clawbacks are in response to the opening of more than two-million bogus customer accounts by employees of the bank who were under heavy pressure from Wells Fargo to meet aggressive cross-sales goals.
The announcement by Wells Fargo also coincides with the release of a report produced by a four-person committee of Wells Fargo board members and a law firm that investigated the sales practices. The report said Stumpf essentially turned a blind eye to what was taking place, and that Tolstedt “focused obsessively on sales targets and withheld information from her boss and the board,” according to the New York Times.
To date the bank has paid $185 million in fines related to the bogus accounts, and refunded $3.2 million to customers who were affected. Some 5,300 employees were also fired for their involvement in the unauthorized accounts. In one instance revealed in the report, a branch manager was found to have a teenage daughter with 24 accounts and a husband with 21 as she sought to meet expectations.
The 113-page report found that there were warning signs as far back as 2004 as Tolstedt “set up ruthless sales goals that even she acknowledged were unreachable, according to the Times. Stumpf was warned as early as 2012 about complaints related to Wells Fargo’s sales tactics, but he dismissed them, according to the report.
The board report was compiled by the law firm Shearman & Sterling and includes interviews with more than 100 current and former employees and a review of 35 million documents. The report found that structurally, the bank was too decentralized, with department heads like Tolstedt given the mantra of “run it like you own it” and granted broad authority to shake off questions from superiors, subordinates or lateral colleagues, the New York Times reported.
Tolstedt was fired in July 2016; Stumpf retired in October 2016.
According to Wells Fargo, Stumpf will surrender $69 million, while Tolstedt will lose $67 million.
The four members of Wells Fargo’s independent investigation group were members of the board before the settlement was announced. “The report depicted the board as hoodwinked by bank executives who withheld important facts,” the Times added.