Dive Brief:
- Wells Fargo’s Human Resources Committee exercised its discretion to cancel a $15 million bonus it had given to its former CEO, Tim Sloan, the bank disclosed in a proxy filing Monday.
- The committee took into account the timing of Sloan’s resignation, the company’s performance and the status of its risk management objectives and outstanding regulatory matters in deciding against the bonus, Wells Fargo said in the filing.
- Sloan resigned in March 2019 after more than two years as Wells Fargo’s chief executive. His predecessor, John Stumpf, quit in October 2016 after the bank’s fake-accounts scandal came to light. The Office of the Comptroller of the Currency (OCC) in January banned Stumpf from the banking industry and fined him $17.5 million.
Dive Insight:
In its proxy filing Monday, Wells Fargo wrote that it can “forfeit or cancel all or any unpaid portion of the award based on Mr. Sloan’s role and responsibility for the company’s progress in resolving outstanding regulatory matters.”
It wouldn’t be the first clawback for the nation’s fourth-largest bank as it attempts to recover its financial standing and reputation. Wells Fargo in 2017 forced Stumpf and its former head of community banking, Carrie Tolstedt, to return $75 million in compensation. Tolstedt is facing civil charges that could result in a $25 million penalty and a ban from the industry.
Sloan’s actions as CEO have led some lawmakers to seek more stringent punishment. House Financial Services Committee Chairwoman Maxine Waters, D-CA, asked the Justice Department last week to consider filing criminal charges against Sloan over "inaccurate and misleading testimony" he gave during a committee hearing last year.
Sloan told lawmakers the bank was in compliance with provisions in an OCC consent order. But the regulator said Wells Fargo had not complied with one of two portions of remediation plans for customers who had paid for unnecessary auto insurance. Sloan resigned shortly after that hearing.
Sen. Elizabeth Warren, D-MA, called for a closer look at Sloan at the time of his resignation. “He shouldn't get a golden parachute. He should be investigated by the [Securities and Exchange Commission] and the DOJ for his role in all the Wells Fargo scams,” she tweeted in March 2019. “And if he's guilty of any crimes, he should be put in jail like anyone else.”
In his first earnings call as Wells Fargo’s CEO, Charlie Scharf made clear that he is prioritizing the resolution of the bank’s regulatory issues. The bank has 12 public enforcement actions that require a significant commitment of resources, he noted, according to American Banker.
“My primary focus has been on advancing our required regulatory work with a different sense of urgency and resolve,” Scharf said in a January press release.
