Wells Fargo took back another US$75 million (S$105.3 million) in pay from two former senior executives who played key roles in the USA bank's fake accounts scandal, its board has announced.
An investigation into sales practices at Wells Fargo has blamed the bank's most senior management for creating an "aggressive sales culture" that led to bank staff opening millions of customer accounts without their authorization. Still, the report itself strikes us as candid but highly critical of WFC's high-pressure culture, its former CEO & the head of community banking (both of whom are no longer with the company and have now had even more compensation clawed back), and the company's management structure.
Together with an earlier round of punishments, Wells Fargo has clawed back a total of US$69 million from Mr Stumpf and US$67 million from Ms Tolstedt. In addition to the $41 million Stumpf already has given up, the board decided last week to "claw back" an additional $28 million of incentive compensation. The board decided on April 7 to require her forfeiture of $47 million in outstanding stock options. In a 2004 email to Stumpf, Tolstedt noted the importance of setting compensation plans that incentivize appropriate behavior, saying that many other banks had built products that encouraged the wrong sales behavior.
But still, not everyone is convinced this is enough. "While we have already made significant progress in making things right with customers and addressing issues, including several issues identified in the investigation, the Board's comprehensive findings provide another important opportunity to learn from our mistakes and take action to improve the way we operate, serve customers, and lead our team members".
Independent board members, paired with outside investigators hired by the company to review its fake accounts scandal, blasted Wells Fargo executives for failing to properly investigate the activity, cultivating an atmosphere of unrealistic expectations and hiding information about the extent of the crisis.
Much of the pressure-cooker climate stemmed from Tolstedt, according to the report, who led Wells Fargo's community bank for eight years before retiring last year.
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Tolstedt's current perspective isn't represented in the report - its authors say she "declined, on advice of counsel, to be interviewed as part of this investigation".
The internal report commissioned by Wells Fargo's board and prepared by law firm Shearman & Sterling said on Monday that there was no systematic retaliation against employees who spoke out about the sales practices. The bank emerged largely unscathed from the 2008 financial crisis largely because it hadn't engaged in the sort of fraudulent and irresponsible practices that crippled other major institutions and almost collapsed the global economy. And up until this year, Wells Fargo management highlighted its so-called "cross-sell ratio", which is the number of accounts or other services a Wells Fargo customer typically had at the bank.
An investigation by The Los Angeles Times in 2013 found that employees had been opening up multiple accounts for customers in order to make their sales goals.
Daily and monthly "Motivator" reports were issued, pitting individuals, branches and regions against one another in terms of sales goals; these were discontinued in 2014 after regional executives complained at a "leadership summit" meeting that the reports perpetuated a "culture of shaming and sales pressure".
The scathing 110-page review, which depicts Stumpf and former Wells Fargo executive Carrie Tolstedt as incompetent managers, also said the pair didn't do enough to address the issues within Wells Fargo.
Wells Fargo is taking back another $75 million from its former CEO and another top executive, blaming them for playing central roles in the bank's fake account fiasco.
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The report suggests that Wells Fargo's management knew its goals were unrealistically high but flogged them anyway.
The San Francisco-based bank disclosed the steep financial penalties for its former chief executive and former head of its community banking arm in a lengthy report from independent directors on Wells Fargo's board.
The justice department is still investigating the bank's practices.
Tolstedt had previously been lauded by Stumpf as the "best banker in America".
"I can't promise perfection", Sloan said.
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