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New York • Wells Fargo's board of directors has blamed the bank's most senior management for creating an "aggressive sales culture" at Wells that eventually led to the bank's scandal over millions of unauthorized accounts.
The results of the investigation, released Monday morning and conducted by the law firm Shearman & Sterling, also called for millions of dollars in compensation to be clawed back from former CEO John Stumpf and community bank executive Carrie Tolstedt.
The 113-page report has been in the works since September, when Wells acknowledged that its employees opened up to 2 million checking and credit card accounts without customers' authorization.
Trying to meet unrealistic sales goals, Wells employees even created phony email addresses to sign customers up for online banking.
"The distortion of the community bank's sales culture and performance management system, which, when combined with aggressive sales management, created pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorized accounts," the board said in its report.
Many current and former employees have talked of intense and constant pressure from managers to sell and open accounts, and some said it pushed them into unethical behavior. The report backs up those employees' accounts.
The bank has already paid $185 million in fines to federal and local authorities and settled a $110 million class-action lawsuit. The scandal also resulted in the abrupt retirement last October of longtime CEO John Stumpf, not long after he underwent blistering questioning from congressional panels. The bank remains under investigation in several states, as well as by the Securities and Exchange Commission, for its practices.
The board's report recommended that Stumpf and Tolstedt have additional compensation clawed back for their negligence and poor management. Tolstedt will lose $47.3 million in stock options, on top of $19 million the board had already clawed back. Stumpf will lose an additional $28 million in compensation, on top of the $41 million the board already clawed back.
When the scandal first broke, Wells said it had fired roughly 5,300 employees as a result of the sales practices, the vast majority of them rank-and-file employees.
Wells has changed its sales practices, and called tens of millions of customers to check on whether they truly opened the accounts in question.
Reeling from the scandal and public pressure, the company also split the roles of chairman and CEO. Tim Sloan, Wells' former president and chief operating officer, took over as CEO. Stephen Sanger, who had been the lead director on Wells' board since 2012, became the company's independent chairman.
Sanger has shown little in the way of mercy to management responsible for Wells' unethical sales practices. Under his chairmanship, Sanger clawed back tens of millions of dollars in stock awards and compensation due to Stumpf and Carrie Tolstedt, the head of Wells retail banking operations before she retired last summer. In January, the board took the unusual action of publicly firing four executives whom the board said had major roles in the bank's sales practices at the center of the scandal. It also cut bonuses to other major executives — including Sloan.
However the board's report concluded that Sloan had little direct involvement in the questionable sales practices.