September 28, 2016

Senator Warren Raises Further Questions About Wells Fargo Executives' Compensation

Text of the letter available here

Washington, DC - U.S. Senator Elizabeth Warren today wrote to the Lead Independent Director of Wells Fargo, Steven Sanger, raising further questions about the compensation for Wells Fargo Chairman and CEO John Stumpf and former head of Community Banking Carrie Tolstedt. 

The senator's letter comes after the announcement by the Wells Fargo Independent Directors of the Board that they will be opening an investigation "into the Company's retail banking sales practices and related matters." The announcement also stated that Mr. Stumpf will forfeit $41 million in unvested equity awards, will forgo his salary during the investigation, and will not receive a bonus for 2016. Ms. Toldstedt will also forfeit unvested equity awards, will not receive a bonus for 2016, and "will not be paid severance or receive any retirement enhancements." 

"These are important first steps by the Independent Directors, but I do not believe these actions are adequate," wrote the senator. "The reduced compensation represents only a fraction of the total pay and bonuses received by Mr. Stumpf and Ms. Tolstedt during the years that their compensation was based in part on inflated retail account growth and cross-selling success." 

Senator Warren also noted that the compensation decisions were not a true "clawback" because they did not recoup earlier compensation or vested stock awards. The piecemeal measures instead merely "disqualify these senior executives from this year's future bonus - which may well be nominal, given the company's poor stock performance to date in 2016 - and unvested equity awards." 

The senator further pressed the Independent Directors, stating that if "senior executives like John Stumpf and Carrie Tolstedt were responsible for the sales goals, incentives, and firm culture that led to this massive scam, then forfeiting a fraction of their future compensation does not remotely approach real accountability." She asked that the Independent Directors brief her staff on the methodology and progress of their investigation.  

Read a PDF copy of the letter here.