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.”[1] Bank employees may have opened as many as two million accounts in customers’
names without those customers’ knowledge.[2] 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.”[3]
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.[4]
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.
1. Michael
Corkery, “Illegal Activity at Wells Fargo May Have Begun Earlier, Chief Says,” The New York Times, September 20, 2016.
2. Ibid.
3. Ibid.
4. Stacy Cowley, “Wells
Fargo to Claw Back $41 Million of Chief’s Pay Over Scandal,” The New York Times, September 27, 2016.