Earlier today we noted that Wells Fargo’s board was actively considering whether to claw back pay from former retail-banking head Carrie Tolstedt as well as from Chief Executive John Stumpf. Now, just a few short hours later it looks like we have our answer with a Special Committee of Independent Directors announcing that they have hired Sherman Sterling as counsel to conduct a thorough review of the bank’s retail banking sales practices and that both Stumpf and Tolstedt will be forfeiting salary, stocks options and 2016 bonuses.
More specifically, CEO John Stumpf will forfeit unvested equity awards valued at approximately $41mm, will forgo salary during the Special Committee’s investigation and will not receive a bonus for 2016.
Meanwhile, Carrie Tolstedt, who was head of community banking before recently departing, will forfeit all of her outstanding unvested equity awards valued at $19m, will not be paid a severance and will not receive any retirement enhancements in connection with her separation from the Company. Tolstedt has also agreed that she will not exercise her outstanding options during the course of the investigation.
As mentioned above, Wells Fargo’s board formed a Special Committee of Independent Directors that will lead a thorough investigation into the company’s retail banking sales practices with the assistance of independent counsel Shearman & Sterling. Stephen Sanger, Lead Independent Director, made clear that additional compensation may be clawed back if deemed appropriate and that “other employment-related action” would be taken as necessary.
“We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the Company’s business are conducted with integrity, transparency, and oversight. We will conduct this investigation with the diligence it deserves — and will follow the facts wherever they lead. Our thousands of outstanding team members and millions of loyal customers and shareholders deserve no less. Based on the results of the investigation, the Independent Members of the Board will take such other actions as they collectively deem appropriate, which may include further compensation actions before any additional equity awards vest or bonus decisions are made early next year, clawbacks of compensation already paid out, and other employment-related actions. We will proceed with a sense of urgency but will take the time we need to conduct a thorough investigation. We will then take all appropriate actions to reinforce the right culture and ensure that lessons are learned, misconduct is addressed, and systems and processes are improved so there can be no repetition of similar conduct.”
And with that it looks as though Elizabeth Warren has won round 1.
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