Senator Elizabeth Warren told Wells Fargo’s board of directors on Thursday that John Stumpf’s recent resignation alone is not enough to assure “proper accountability” at the bank, and raises “unanswered” questions—including Stumpf’s departing compensation and whether the bank’s new CEO was involved in the fake accounts scandal.
In her letter, which was jointly penned with fellow Senate Banking Committee member Sen. Bob Menendez, D-N.J., the senators asked if Stumpf will receive any other retirement-related payments, and whether the Board has “properly addressed” whether newly appointed Wells CEO Tim Sloan, the bank’s former president and chief operating officer, “knew about or played any role in the scandal.”
“Given the scope of wrongdoing on his watch, Mr. Stumpf’s resignation is entirely appropriate,” the senators wrote. “But a resignation alone is not enough to assure proper accountability at Wells Fargo. Instead, it raises additional questions.”
The letter notes that Carrie Tolstedt, the former head of Wells Fargo’s retail banking, reported directly to Sloan beginning in November 2015, and that Sloan admitted recently “that he was aware of the reports of fraudulent activity” by bank staff as early as 2013.
“It is difficult to believe that he had no knowledge of or bears no responsibility for the actions of thousands of Wells Fargo employees creating fake accounts under his and other top executives’ watch,” the senators wrote.
The senators wrote that if Stumpf is “allowed to walk away with tens of millions of dollars in compensation that he received while bank employees were engaging in widespread fraudulent activity, then he has profited from the bank’s fraud,” adding that the bank is “turning its back on accountability” if it has appointed a new CEO who “was aware of, but did nothing to prevent the widespread fraud that harmed hundreds of thousands of Wells Fargo customers and shareholders.”
The Board’s recent announcement that Stumpf had agreed to forfeit $41 million in unvested equity awards and that he would not receive a salary during the ongoing board investigation or a bonus for 2016, “represents only a fraction of the total pay and bonuses Mr. Stumpf received during the years that his compensation was based in part on inflated retail account growth and cross-selling success,” Warren and Menendez wrote.
“What will happen with Mr. Stumpf’s compensation dating from the time when wrongdoing at Wells Fargo was first reported?”
The Senators cite a Wells Fargo representative as stating that Stumpf will not receive a severance payment as part of his retirement.
However, the two wrote, “Forbes magazine reported that ‘[a]ccording to a March 2016 proxy statement, Stumpf is entitled to a $24 million ‘supplemental cash balance plan,’” the proceeds of which “are not paid until six months after retirement.”
Stated the senators: “It is unclear whether Stumpf will receive this $24 million payment or any other retirement benefits.”
Warren and Menendez told the Wells board to provide written answers to the following questions no later than Oct. 27, and provide their staffs with a briefing on these issues no later than Nov. 3:
1. Did the Wells Fargo Board of Directors make any agreements with Mr. Stumpf related to his retirement and his compensation?
2. Will Mr. Stumpf be receiving the $24 million “supplemental cash balance plan” as a retirement benefit? Will he receive any other retirement benefits?
3. Does he remain eligible for any additional compensation related to his service at Wells Fargo?
4. Does Mr. Stumpf’s decision to retire have any impact on the Board’s ability to claw back any of his previous compensation?
5. Will Mr. Stumpf serve as a “consultant” or in any other capacity for Wells Fargo or the Board?
6. How did the Board conduct it search for a successor to Mr. Stumpf? Did the Board consider applicants other than Mr. Sloan, and if so, how did the Board identify those applicants?
7. Did the Board ask Mr. Sloan about his knowledge of the false account scandal prior to elevating him to CEO?
8. Did the board ask Mr. Sloan if he took any action in response to the false account scandal?
9. What information did Mr. Sloan provide to the Board in response to these queries?
10. Did the Board conduct an independent investigation of whether Mr. Sloan knew about or took appropriate action to prevent this scandal?
11. What were the findings of this investigation?
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