John Stumpf, the chairman and CEO of Wells Fargo, is giving up more than $40 million in pay as punishment for widespread wrongdoing at the bank he has run for nearly a decade.
At an emergency meeting of the bank’s board late yesterday (Sept. 27), the independent directors said they launched an independent investigation into the scandal, which involved thousands of employees opening deposit and credit-card accounts for customers without their knowledge in order to meet sales targets and earn bonuses.
Stumpf will forfeit all of his outstanding share-based compensation, which amounts to around $41 million at the bank’s current stock price. He will also give up his bonus this year and won’t receive any salary during the investigation. Like other bosses of large, listed companies, the vast majority of Stumpf’s annual pay is comprised of stock instead of cash—his base salary was $2.8 million last year, out of a total package worth just over $19 million.
Roughly speaking, Stumpf’s $41-million forfeiture is worth a quarter of the total pay he has received since becoming CEO in 2007.
Carrie Tolstedt, who was head of Wells Fargo’s wayward retail banking division, has left the company and will also forgo her 2016 bonus, severance pay, and some $19 million in unvested stock awards.
In clawing back pay from executives, the bank’s board has taken some of US senator Elizabeth Warren’s advice. The senator ripped into Stumpf last week when was hauled in front of the Senate Banking Committee. “You should resign,” she said. ”You should give back the money that you took while this scam was going on,” she said.
Starting in 2011, according to regulators, Wells Fargo employees opened more than 2 million unauthorized accounts, sticking unaware customers with almost $2.5 million in fees. The bank has since fired 5,300 workers and agreed to pay a $185 million fine.