Wells Fargo & Co. CEO John Stumpf, fighting to keep his job amid a national political furor, will forgo more than $41 million of stock and salary as the bank’s board investigates how employees opened legions of bogus accounts for customers.
It’s a swift turn for one of the industry’s most exalted leaders, marking the biggest forfeiture of compensation from a major U.S. bank chief since at least the 2008 financial crisis. But it may not be enough to spare Stumpf another lashing when he returns to Capitol Hill on Thursday. Last week, Sen.Elizabeth Warren, D-Mass., demanded he resign for “gutless leadership” after he blamed abuses on low-wage employees.
Giving up pay “is a smack on the head, but it doesn’t end the question of whether Mr. Stumpf should be allowed to head a bank,” Erik Gordon, a law professor at the University of Michigan in Ann Arbor. “He is responsible for the culture and he knew or should have known about a practice that was so wide-spread and well-known in the bank.”
Stumpf told employees in a memo that he offered to give up $41 million in unvested stock, which reflected his performance back to 2013, and the board accepted. Former community banking chief Carrie Tolstedt will forgo about $19 million in unvested stock, and agreed not to cash in outstanding options during the review, the lender said Tuesday in a statement.
She has left the bank, after previously planning to retire at year-end. Neither Stumpf nor Tolstedt will get a bonus for this year.
Wells Fargo is under intense pressure to show it’s holding leaders accountable before Stumpf testifies to the House Financial Services Committee, after government investigations found branch employees potentially created two million deposit and credit-card accounts without authorization.
The CEO faced withering questions from lawmakers on both sides of the aisle at a Senate hearing last week, a rare moment of bipartisanship.
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“We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the company’s business are conducted with integrity, transparency and oversight,” Stephen Sanger, the board’s lead independent director, said in the statement. “We will proceed with a sense of urgency but will take the time we need to conduct a thorough investigation.”