Wells Fargo CEO John Stumpf Still Faces Risks, Following $41 Million Clawback
29 September 2016 - 3:30AM
Dow Jones News
Can $41 million in forfeited compensation buy John Stumpf job
security at embattled Wells Fargo & Co.?
For now, there are no signs that he is contemplating giving up
his roles as chairman and chief executive over the bank's
sales-tactics scandal, according to people familiar with the
matter. And there haven't been any formal discussions at the board
about Mr. Stumpf's resigning from either of his positions,
according to the people.
That is despite the extraordinary rebuke handed down by the
board Tuesday night. The bank's board said Mr. Stumpf agreed to:
forgo all unvested equity awarded to him, worth $41 million; not
take a bonus during 2016; take no salary during an independent
investigation by the board; and recuse himself from all
deliberations related to the bank's sales-tactics scandal.
But Mr. Stumpf's position is far from secure. On Thursday, he
will return to Capitol Hill for the second time in as many weeks,
appearing before the House Financial Services Committee to explain
the bank's allegedly "widespread illegal" sales tactics that led to
as many as 2 million accounts opened with fictitious or
unauthorized customer information. The bank has fired 5,300
employees over five years related to the bad behavior.
The board's investigation could be another potential factor in
Mr. Stumpf's future at the San Francisco lender. It is expected to
take a few months, and there is hope it could wrap up by year-end,
people familiar with the board said.
It is likely that Mr. Stumpf would stay on through that process,
but the situation could change depending on the board's findings,
these people said.
How Mr. Stumpf handles his House appearance could also play into
his longevity at the bank. The 63-year-old executive's performance
before the Senate Banking Committee a week ago was widely viewed as
flawed, in part because he wasn't able to show any substantive
steps by the bank or by the board following the scandal. He also
deflected many of the toughest questions. At the House hearing, Mr.
Stumpf will be able to point to the board's most recent
actions.
In a message from Mr. Stumpf sent to employees, the executive
said he "should have acted sooner and more aggressively to correct
weaknesses in our operations that allowed wrongful sales practices
to occur in our retail banking business." He said he recommended to
the board, and it approved, his forfeiting of about $41 million of
stock awards, "reflecting years of performance dating back to
2013."
Wells Fargo released a statement late Tuesday night saying it
"fully supports the decision of the independent directors...Our
management team will cooperate fully and is dedicated to
strengthening our culture and taking strong actions to ensure this
conduct does not happen again."
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
September 28, 2016 13:15 ET (17:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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