Wells Fargo strips CEO, 7 top execs of 2016 bonuses
NEW YORK — The leaders of Wells Fargo just took a big pay hit due to the bank’s fake account scandal.
Wells Fargo’s board of directors has stripped CEO Tim Sloan and seven of his top lieutenants of their 2016 bonuses as the bank seeks to hold management accountable for recent stumbles.
The board took further punitive action by chopping in half stock awards that these leaders were due to be paid.
All told, Wells Fargo said its management team is losing about $32 million in total compensation, based on these “clawbacks” and what they would have made in 2016 bonuses.
Wells Fargo stressed that the actions are not based on “any findings of improper behavior” by these executives in the board’s ongoing investigation into the fake account scandal.
Instead, the board said it acted to “reinforce accountability of the company’s leadership.”
Wells Fargo has been caught up in scandal since September when the bank admitted to creating as many as 2 million fake accounts and was hit with allegations of mistreating workers.
Wells Fargo Chairman Stephen Sanger said in a statement that the compensation actions are part of the board’s efforts “to promote accountability and ensure Wells Fargo puts customer interests first.”
“I fully support the Board’s actions and believe they are critical to Wells Fargo’s commitment to our customers,” Sloan said.
Besides Sloan, the pay hit impacts the seven other Wells Fargo executives who were members of the bank’s operating committee before that board was shaken up in November following the scandal.
That includes the following execs: John Shrewsberry, the bank’s chief financial officer; David Carroll, head of wealth and investment management; Avid Modjtabai, head of payments; Hope Hardison, chief administrative officer; David Julian, chief auditor; Michael Loughlin, chief risk officer; and James Strother, general counsel.
Former Wells Fargo CEO John Stumpf already forfeited $41 million in stock awards last year before abruptly retiring under pressure.
Last month, Wells Fargo fired four senior employees who either work or used to work in the community banking division at the heart of the scandal.
CFRA Research analyst Cathy Siefert wrote in a report that Wells Fargo’s new punitive actions are “necessary.”
However, she stressed that the bank needs to do more to explain changes to its “culture to prevent another mishap in the future.”
Wells Fargo’s board said its independent investigation into the scandal is “ongoing” and is expected to be completed before the bank’s annual shareholder meeting next month. The findings and potential additional actions are set to be made public at that time.
Wells Fargo’s settlement with regulators last September quickly turned into one of the biggest banking scandals in recent years. Not only did Wells Fargo say it fired 5,300 workers over several years for improper sales conduct, but employees told CNNMoney they were fired after blowing the whistle on illegal activity.
The news sparked hearings in Congress, numerous lawsuits and several state and federal investigations.