CEO: Wells Fargo has hired back 1000 employees since scandal
20 April, 2017, 12:00 | Author: Leticia Walters
He also received stock awards.But Well Fargo announced on Monday that it was clawing back some $75 million in compensation from Stumpf and the bank's former head of community banking, Carrie Tolstedt. But many others "left due to their concerns", or as a result of the bank's longtime emphasis on selling more products, he said. More recently, the federal government ordered Wells Fargo to rehire one fired whistleblower and warned it may force the bank to welcome back another. Last week, influential proxy advisory firm Institutional Shareholder Services urged shareholders to vote against the election of 12 of the 15 board members at the upcoming annual meeting, including Sanger.
The justice department is still investigating the bank's practices.
Instituted forfeitures and clawbacks, and made compensation adjustments, with respect to senior leaders, totaling more than $180 million. The scandal also resulted in the abrupt retirement last October of longtime CEO John Stumpf, not long after he underwent blistering questioning from congressional panels.
The "clawbacks" of executive pay by the company are among the largest in history and a sign that big US banks feel increasingly under pressure to show the public that they can hold themselves accountable for corporate wrongdoing.
She declined, on advice of counsel, to be interviewed for the investigation, the authors wrote.
Freeman was particularly aggressive in her Jump into January campaigns; witnesses described the practice of "running the gauntlet", in which district managers dressed up in themed costumes, formed a gauntlet and had each manager run down the line to a whiteboard and report the number of sales they achieved.
"Aided by a culture of strong deference to management of the lines of business (embodied in the oft-repeated "run it like you own it" mantra), the community bank's senior leaders distorted the sales model and performance management system, fostering an atmosphere that promoted low quality sales and improper and unethical behavior", according to the report. That was the year the Los Angeles Times published a landmark investigation on Wells Fargo's sales culture.
As for Stumpf, the board determined he was too focused on the "bank's decades of success with cross-sell and positive customer and employee survey results". "He was too late and too slow to call for inspection of or critical challenge to the basic business model", the board continued.
Sloan promised that the tactics and pressure that hurt employees, customers and the Wells Fargo reputation "will never be allowed to occur again". Functions including risk and human resources reported into the unit heads without enough companywide attention, the report added.
"We strongly disagree with the report and its attempt to lay blame with Ms Tolstedt", said Enu Mainigi, a lawyer with Williams & Connolly.
After becoming president in November 2015, Sloan discussed with Tolstedt that "she needed to be more open to change and to resolve the sales practice issues quickly", the report says.
The 110 page report was conducted by board directors, assisted by external counsel - in other words, it wasn't wholly internal or wholly independent and it has shown up an internal report that had basically absolved the board, including chair, Stephen Sanger.
The "worst is over" for Wells Fargo shares, with most of the bad news about the firm's accounting scandal reflected in the stock at this point, bank analyst Scott Siefers told CNBC on Monday.
However the board's report concluded that Sloan had little direct involvement in the questionable sales practices.
Terminated executives linked to inappropriate sales practices. Employees were blaming unrealistic sales targets.
In the report, which was carried out by the bank's chairman Stephan Sanger and three other independent directors, Tolstedt is blamed for ignoring the systemic nature of the problem which was pinned instead on individual wrongdoers and accused of obstructing the board's efforts to get to the bottom of what was going on.
Improper sales practices began to escalate as far back as 2002, years earlier than the bank has agreed to check for consumer harm, the report noted. The bank has also eliminated sales incentives and realigned its risk management operations to avoid similar problems in the future. Wells' board of directors said both executives dragged their feet for years regarding problems at the second-largest USA bank and were ultimately unwilling to accept criticism that the bank's sales-focused business model was failing.
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