Wells Fargo CEO, executives will forfeit tens of millions in bonuses

WASHINGTON D.C. -- Wells Fargo says CEO John Stumpf and the executive who ran the bank’s consumer banking division will forfeit tens of millions of dollars in bonuses as it tries to stem a scandal over its sales practices.

The board of directors at the nation’s second-largest bank said Tuesday that Stumpf will forfeit $41 million in stock awards, while former retail banking executive Carrie Tolstedt will forfeit $19 million of her stock awards, effective immediately. Both are also giving up any bonuses for 2016.

“The Independent Directors have taken a number of initial steps they believe are appropriate to promote accountability at the Company,” the bank said in a statement.

The San Francisco-based bank’s independent directors are also launching their own investigation.

“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. We will conduct this investigation with the diligence it deserves -- and will follow the facts wherever they lead,” said Lead Independent Director Stephen Sanger in a statement. 

Wells Fargo has agreed to pay $185 million to settle allegations its employees opened millions of accounts without customers’ permission to reach aggressive sales targets. 

Stumpf has faced bipartisan outrage for his handling of the scandal. He is scheduled to appear before the House Financial Services Committee on Thursday.

Still, some bank analysts think Stumpf is likely to keep his job. Analysts with Keefe, Bruyette & Woods said in a note that forfeiting part of his compensation should ease the political pressure on Wells Fargo and buy the executive more time to redress the fraud.

The bank also faces multiple lawsuits, including several filed in recent days on behalf of workers who claim they were fired or demoted for not behaving unethically and falling short of sales goals as a result.

“We disagree with the allegations in the complaint and will vigorously defend against the misrepresentations it contains,” Wells Fargo said in a statement. 

Another class-action complaint alleges violations of the Securities and Exchange Act, saying Wells Fargo withheld material information from investors.

“The recent revelations of Wells Fargo’s fraudulent and abusive conduct targeting its own customers and overseen by its senior management are staggering,” Shawn Williams, a lawyer at Robbins Geller Rudman & Dowd, said in a statement. “While the resulting stock price declines have obviously harmed shareholders, the misconduct has exposed the company to criminal probes that could prove even more damaging to the public and shareholders.”