It cost Wells Fargo $185 million in fines to deal with a massive scandal involving a push from bank executives in a cutthroat culture for employees to sell, sell, sell multiple type of accounts to customers who didn’t need them.
But the bank seems to have a tin ear when it comes to the public perception of this scandal. On Monday, in advance of an April 25 shareholder meeting, the bank said it had pulled back an additional $75 million n stock awards from a couple of top executives. Those executives, former CEO John Stumpf and former head of business, Carrie Tolstedt, have had $69 million and $67 million in compensation, respectively, taken back.
Does Wells Fargo, which in a report blamed the scandal on a culture centered on sales and on the fact that the community banking unit had too much authority (probably granted because of the money being made there), really think the public is now going to forget about this?
Rather, customers and observers will be asking what in the world a couple of banking executives were doing making this kind of money in the first place. Nobel scientists who cure diseases and find planets and bring peace to war-torn corners of the Earth make a fraction of a fraction of this. The pay levels were absurd and insulting to the customers who are the backbone of the bank’s business.
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Stumpf became the poster boy for corporate greed when he appeared before a congressional committee in October of last year and was “addressed” by Massachusetts Sen. Elizabeth Warren, the former Harvard professor who is one of the most brilliant minds in Congress.
Warren blistered Stumpf and said he should give back all the money he made during the “scam” as she called it (two million accounts opened without an OK from customers) and said Stumpf exhibited “gutless leadership.” The now-resigned CEO looked like a man who might have offered to trade places with Custer at Little Big Horn.
The heat on the bank may have been turned down in the minds of insiders, but the board of directors meeting could be interesting, reports The Charlotte Observer. (The newspaper noted Wells’ largest employment hub is in Charlotte.)
Some observers are urging that shareholders vote against all the 15 directors who are up for re-election. And while those attending aren’t likely to grill executives the way Warren went after Stumpf, things may get unpleasant for them, and justifiably so.
Shareholders have a right to demand evidence, strong evidence, that the bank’s culture has truly changed. And part of the change ought to be a downsizing of the ridiculous compensation levels that clearly weren’t appropriate. How exactly did Wells’ customers and shareholders benefit from those salaries? That sounds like something appropriate for Sen. Warren’s next line of questioning.
Bet the bank executives can’t wait for that.