Wells Fargo May Act on Clawbacks Before House Hearing, WSJ Saysby and
Board weighs recouping Stumpf and Tolstedt’s pay, paper says
House Financial Services Committee scheduled to meet Thursday
Wells Fargo & Co., grappling with fallout from a scandal over unauthorized customer accounts, is close to deciding whether it will claw back pay from Chief Executive Officer John Stumpf and former retail bank head Carrie Tolstedt, the Wall Street Journal reported.
The bank’s board may act before Stumpf testifies Thursday at a hearing of the House Financial Services Committee, the newspaper reported Tuesday, citing a person familiar with the matter.
Wells Fargo hired a law firm to advise the board on potential clawbacks. Robert Mundheim, a lawyer with Shearman & Sterling LLP in New York, was retained to help the board determine whether to recoup compensation from Stumpf, Tolstedt and Chief Operating Officer Tim Sloan, the newspaper reported Friday.
Oscar Suris, a spokesman for the San Francisco-based lender, declined to comment on the report.
Tolstedt, 56, ran the retail bank when employees potentially opened more than 2 million bogus deposit and credit-card accounts. Wells Fargo announced in July she was retiring and would be replaced by retail brokerage head Mary Mack. Stump, the CEO since 2007, was urged to return compensation and resign by Massachusetts Democrat Elizabeth Warren during a Senate Banking Committee hearing last week.
Stumpf, 63, has unvested stock awards that could be worth $36 million if the bank hits certain financial targets, according to regulatory filings. That figure could be increased by another grant, likely awarded in February, that won’t be disclosed until Wells Fargo files its next proxy statement. The firm could recoup those awards under its clawback policy.
Wells Fargo also has the ability to claw back unvested shares from Tolstedt, according to its proxy filing. She has about $19 million of such awards, the bank said in a Sept. 19 letter to members of the Senate. Cash and stock she already owns -- including about $44 million of shares amassed during her 27-year career and $34 million in previously vested stock options -- can’t be recovered, according to the bank’s filings.
Wells Fargo, which settled allegations with regulators on Sept. 8 and paid $185 million in fines, didn’t admit or deny wrongdoing. The bank fired 5,300 workers over five years -- about 10 percent of them managers -- and said it would eliminate sales goals regulators blamed for encouraging the creation of the bogus accounts. The Justice Department also has opened an investigation, a person familiar with the matter said last week.
Wells Fargo fell 0.3 percent to $44.74 at 10:53 a.m. in New York. The stock has slumped 18 percent this year, the worst performance in the 24-company KBW Bank Index.