The congressional grilling of Wells Fargo & Co.’s John Stumpf has already started.
A group of Democratic U.S. senators, led by Elizabeth Warren, asked the chairman and chief executive officer in a letter dated Sept. 15 whether the bank will claw back top managers’ pay following allegations that employees opened millions of accounts without customers’ knowledge. The lawmakers called out Carrie Tolstedt, who led the unit where the alleged misconduct occurred, saying there seems to be ample justification for recouping at least some of her compensation.
“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. Toldstedt’s incentive rewards.”
The lawmakers have asked for a response by Monday, one day before Stumpf is scheduled to testify on Capitol Hill. Sherrod Brown, the top Democrat on the Senate Banking Committee, Jack Reed of Rhode Island, Robert Menendez of New Jersey and Jeff Merkley of Oregon also signed the letter. The senators also asked for more information about the timing and nature of Tolstedt’s announced retirement in July. They requested that the bank provide communications between members of the board about the pay she will receive after leaving the bank.
Wells Fargo last week agreed to pay $185 million to the Consumer Financial Protection Bureau and other regulators to resolve claims that employees opened more than 2 million unauthorized accounts. While the bank didn’t admit or deny wrongdoing, it has said it regrets and takes responsibility for what happened.
Tolstedt, 56, has spent 27 years at the bank. In the July retirement announcement, 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.”
According to a Bloomberg analysis of regulatory filings, Wells Fargo’s clawback policy permits the bank to recoup about $17 million in unvested shares from Tolstedt. She is slated to receive $3.07 million in retirement benefits, data compiled by Bloomberg show. That doesn’t include previously vested stock options that would be worth $36 million if exercised at Tuesday’s stock-market close. Tolstedt also holds about $51 million of shares amassed during her career.
Earlier Thursday, Warren — one of the finance industry’s loudest critics in Congress — questioned whether Stumpf should keep his job and pay following the scandal. She’s also used the incident to emphasize the need for the Consumer Financial Protection Bureau and attack U.S. House Republicans who advanced legislation earlier this week to undo the 2010 Dodd-Frank Act.