Arguing that committing a massive fraud that creates millions of phony consumer accounts should not be the sort of thing that banking executives should be allowed to get rich doing, lawmakers are beginning to ask Wells Fargo CEO John Stumpf some tough questions about just what exactly it intends to do about all those executives it bonused extravagantly for cheating people.
Specifically, they would really like to know if Stumpf has any interesting plans for clawing some of those funds back.
Led by consumer protection advocate Sen. Elizabeth Warren (D-MA), a group of Democratic senators has asked Wells’ chairman and CEO whether or not the bank intends to take some of that compensation back from executives and managers who allegedly supported the opening of 2 million fraudulent accounts. Specifically, the lawmakers referred to Carrie Tolstedt, who led the unit where the alleged misconduct occurred.
“We write to ask whether the board of directors will invoke Wells Fargo’s clawback authority to recover any of the compensation the company has provided to its senior executives, including Carrie Tolstedt,” they wrote. “There appear to be multiple grounds on which to trigger the clawback provisions to recoup some or all of Ms. Tolstedt’s incentive rewards.”
The letter also calls out the nature and timing of Tolstedt’s retirement from the bank in July and requests the bank provide communications between members of the board about the pay she will receive after leaving the bank.
Stumpf is scheduled for his official Congressional grilling on Tuesday (Sept. 20) on Capitol Hill; the letter writers requested a response by Monday (Sept. 19).
Tolstedt, 56, was with Wells Fargo for 27 years before her retirement in July. Stumpf praised her as “one of our most valuable Wells Fargo leaders, a standard-bearer of our culture, a champion for our customers and a role model for responsible, principled and inclusive leadership.”
Wells, however, has a clawback policy (according to regulatory filings reviewed by Bloomberg) that would allow the bank to recoup about $17 million in unvested shares from Tolstedt.
At present, Tolstedt will collect $3.07 million in retirement benefits. She is also entitled to previously vested stock options that would be worth $36 million if exercised at Tuesday’s stock market close, and she holds about $51 million of shares amassed during her career.
Warren has publicly questioned whether Stumpf should keep his job and pay following the scandal.