Wells Fargo CEO John Stumpf will forfeit much of his 2016 salary — including his bonus and $41 million in stock awards — as the bank launches a probe into its phony accounts scandal.
The fallout from the controversy has also resulted in its first major executive departure. Carrie Tolstedt, who headed the division that created the fake accounts, has left the company. Tolstedt was planning on retiring at the end of 2016, but she has exited the company ahead of schedule.
She will not receive a bonus or severance, and she’ll forfeit all of her $19 million worth of unvested equity awards.
The company’s board of directors also said Tuesday that it’s launching an independent investigation into the company’s sales practices. During the company’s investigation, Stumpf will work for free and Tolstedt also agreed not to cash in on any of her outstanding stock options.
Stephen Sanger, the board’s lead independent director, said the executives could face further penalties depending on the results of the investigation.
He said in a statement that the board may “take such other actions as they collectively deem appropriate” — including issuing additional clawbacks.
Yet if they’re cleared of wrongdoing, both Stumpf and Tolstedt could end up taking home some of their hefty pay packages.
The decision to “claw back” Stumpf’s and Tolstedt’s compensation comes just before Thursday’s big Wells Fargo hearing in front of the House Financial Services Committee and amid a string of embarrassing headlines about the opening of unauthorized accounts.
Wells Fargo paid Stumpf $19.3 million in total compensation for 2015, in part due to the bank’s growing number of accounts. An intense focus on adding new accounts, former employees say, led to a pressure-cooker atmosphere at Wells Fargo.
Last year, Stumpf received $4 million in awards for factors that included “primary consumer, small business and banking checking customers” that year.
That bonus led Jeffrey Sonnenfeld, an authority on corporate governance at Yale University, to say that “without a doubt” some of Stumpf’s pay should be clawed back. “He should be docked,” Sonnenfeld said.
A CNNMoney analysis, conducted prior to the clawbacks, showed that Stumpf could leave Wells Fargo with about $200 million of cash, Wells Fargo stock and options.
Last week, Senator Elizabeth Warren slammed Stumpf for “gutless” leadership, in part for his refusal to cut compensation for Carrie Tolstedt, who led Wells Fargo’s community banking division during the entire time fake accounts were created.
Tolstedt had been set to walk away with a $124 million payday through a mix of shares, options and restricted stocks.