Article by By Stacy Cowley (c) Business and Technology News - Read full story here.
Wells Fargo leaders reaped lavish pay as scandal unfolded
March 17, 2017
Top executives have surrendered more than $90 million in compensation, fired employees at all levels and vowed to clean house. [...] the top executives — particularly the current chief executive officer and his predecessor, who retired under pressure in October — still took home lavish sums last year, according to a regulatory filing last week. The San Francisco company’s former CEO, John Stumpf, realized pretax earnings of more than $83 million by exercising vested stock options, amassed during his 34 years at the bank, and receiving payouts on certain stock awards. In a quirk of timing that might raise some questions, one month before regulators announced penalties against Wells Fargo over its long-running fake accounts scheme, Stumpf exercised 1.5 million options, a significant chunk of his vested holdings. “He took his winning tickets to the window while the window was still open,” said Brian Foley, an executive compensation consultant who analyzed Stumpf’s transactions. At next month’s annual shareholders meeting, the bank’s top executives will confront disgruntled investors, including an order of nuns who say they are embarrassed to call Wells Fargo their bank, and Gerald Armstrong, who has held the bank’s stock for nearly 50 years and thinks the “lap dogs” on the bank’s board need to be replaced by a “growling Doberman.” The nuns, members of Sisters of St. Francis of Philadelphia, want to see Wells Fargo commit to “real, systemic change in culture, ethics, values and financial sustainability,” said Sister Nora Nash, the order’s director of corporate social responsibility. At next month’s meeting, to be held in Ponte Vedra Beach, Fla., shareholders will vote on a proposal from the sisters asking the bank for a full accounting on the “root causes” of its fraudulent activity, and the steps being taken to prevent future misdeeds. “We think this issue is so material to investors that it’s deserving of a hearing at the shareholder meeting,” said Brandon Rees, deputy director of the AFL-CIO’s investment office. Next month, the bank’s board plans to release the results of its internal investigation into the wrongdoing, which prompted the firing of about 5,300 rank-and-file workers over the past few years. Four senior executives — including the former chief risk officer of the bank’s retail banking division and two regional presidents — were ousted last month after being accused of wrongdoing. The company paid $185 million to settle cases brought by two federal regulators and the Los Angeles city attorney and refunded $3.2 million to customers who were charged fees on unauthorized accounts. The Financial Consumer Agency of Canada said this week that it would review banks’ practices in light of reports that employees at TD Bank, under pressure to meet sales targets, had opened accounts without customers’ consent.