On September 20, 2016, U.S. Senators questioning Wells Fargo’s CEO, John Stumpf in the Senate’s Banking Committee “seemed unmoved” by his “attempts to explain why more senior bank executives had not been tied to the widespread illegal sales activity.” Bank employees may have opened as many as two million accounts in customers’ names without those customers’ knowledge. Senator Elizabeth Warren, a Massachusetts Democrat, “said the illegal sales were a big driver of Wells Fargo’s success as one of the nation’s most profitable banks.” She called on Stumpf to give back a large portion of his compensation, resign and be criminally investigated. I contend that giving back some of his compensation and resigning from the bank would have been necessary for the CEO get past the scandal in being able to be a credible and trustworthy ethical leader. That the bank’s board acted independently from its chairman, the CEO, a week later in taking back $41 million of his compensation and $19 million of the stock grants from Carrie Tolstedt, who had led the bank’s retail banking division (and cancelled any bonus for either official) does not lend the CEO any renewed credibility. Rather, the action made the bank’s board members look like they were trying to do what was necessary, given the CEO’s underperformance during the Senate hearing.
The full essay is at "Difficulty of Ethical Leadership."
1. Michael Corkery, “Illegal Activity at Wells Fargo May Have Begun Earlier, Chief Says,” The New York Times, September 20, 2016.
4. Stacy Cowley, “Wells Fargo to Claw Back $41 Million of Chief’s Pay Over Scandal,” The New York Times, September 27, 2016.