NEW YORK — Wells Fargo CEO John Stumpf is forfeiting $41 million in stock awards as the bank launches a probe into its phony accounts scandal.
The fallout from the controversy has also resulted in its first major executive departure. Carrie Tolstedt, who headed the division that created the fake accounts, has left the company. She will not receive a bonus or severance.
The company’s board of directors is also said Tuesday that it’s launching an investigation into the company’s sales practices. During the company’s investigation, Stumpf will work for free. He won’t receive pay of any kind.
That, and the decision to “claw back” Stumpf’s equity rewards by $41 million and Carrie Tolstedt’s executive compensation by $19 million, comes just before Thursday’s big Wells Fargo hearing in front of the House Financial Services Committee and amid a string of embarrassing headlines about the opening of unauthorized accounts.
Wells Fargo paid Stumpf $19.3 million in total compensation for 2015, in part due to the bank’s growing number of accounts. An intense focus on adding new accounts, former employees say, led to a pressure-cooker atmosphere at Wells Fargo.
Last year, Stumpf received $4 million in awards for factors that included “primary consumer, small business and banking checking customers” that year.
That bonus led Jeffrey Sonnenfeld, an authority on corporate governance at Yale University, to say that “without a doubt” some of Stumpf’s pay should be clawed back. “He should be docked,” Sonnenfeld said.
A CNNMoney analysis, conducted prior to the clawbacks, showed that Stumpf could leave Wells Fargo with about $200 million of cash, Wells Fargo stock and options.
Last week, Warren slammed Stumpf for “gutless” leadership, in part for his refusal to cut compensation for Carrie Tolstedt, who led Wells Fargo’s community banking division during the entire time fake accounts were created.
Tolstedt had been set to walk away with a $124 million payday through a mix of shares, options and restricted stocks.