Wells Fargo’s Post-Scandal Pay Plan Eliminates Sales GoalsBy
Wells Fargo & Co. introduced a compensation plan for retail-bank employees that shifts the focus from sales goals to customer service after the old incentives led to a scandal over the creation of potentially millions of fraudulent accounts.
Incentive pay for branch employees in 2017 will be based on “customer growth, service and usage of products,” according to a summary of the new compensation plan disclosed by the San Francisco-based lender on Tuesday. “There will be controls in place to monitor bad behavior.”
Wells Fargo executives have been working since September to contain the fallout from a scandal in which community bank employees opened as many as 2 million deposit and credit-card accounts without customers’ knowledge. In October, the lender removed sales goals from retail banker compensation plans tied to the number of products sold.
Wells Fargo shaped its previous incentive plan in part to increase the number of products sold to customers, and lacked sufficient oversight, according to U.S. regulators, which imposed $185 million in fines in September. The findings by the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency triggered a public backlash that resulted in two days of congressional hearings and forced the resignation of Chief Executive Officer John Stumpf.
Wells Fargo employees will now be subject to “periodic reviews and checkpoints to monitor any unintended outcomes or behavior” that result from the new compensation plan and the company will establish controls “to monitor bad behavior,” according to the summary. Total compensation will skew more heavily toward base salary and less toward variable bonuses for most branch employees.
Mary Mack, who took over as head of community banking in July, had summoned about 175 regional presidents and area managers to a two-day meeting in Dallas this week to introduce the plan, a person with knowledge of the matter has said.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.