The Former Wells Fargo CEO’s Future Is Secure Despite Tens of Millions in Penalties
(Bloomberg) -- John Stumpf left Wells Fargo & Co. with his image in tatters, lost more than $70 million through forfeitures and a clawback, and now faces a government fine and a lifetime ban from the financial industry.
But that won’t upend his nest egg.
Even after subtracting the clawback and forfeitures, the bank’s former chief executive officer stepped away with stock worth more than $80 million, according to calculations by Bloomberg. He collected more than $60 million of salary and bonuses during his years at the San Francisco-based firm. And he had accumulated a pension worth $22.7 million by the time he departed.
Stumpf lost his job in 2016 amid revelations that bank employees had opened potentially millions of fake accounts to meet sales goals. The allegations were damning: For years, regulators said, he had failed to heed countless warning signs of the abuses.
The Office of the Comptroller of the Currency on Thursday announced that Stumpf had agreed to a $17.5 million fine and the lifetime ban -- an unprecedented move against a banking chief. The regulator said it was seeking to impose a record $59 million in fines on eight of Wells Fargo’s former leaders for failing to stop the abuses in its branches.
In more than 100 pages of documents, the OCC detailed the “massive illegal activity” it said took place at the bank, causing “catastrophic reputational damage.” Three of the former managers, including Stumpf, agreed to consent orders and will pay penalties. Ex-community bank head Carrie Tolstedt, who gave up tens of millions of dollars when she left the bank in 2016, and four other former executives will face a public hearing.
While Stumpf’s nest egg is big, his pay during his nine-year term as CEO was hardly outsized when compared to that of other banking chiefs. And although he was subject to a clawback -- a measure that’s rarely used on public-company executives -- there’s no precedent among U.S. companies to attempt recouping an executive’s salary because of wrongdoing.
That reality may not satisfy every critic.
“These charges on their own will not bring justice for employees who were unfairly scapegoated,” said Patrick Creaven, a Wells Fargo employee who’s also a member of Committee for Better Banks, an advocacy group. He acknowledged that the OCC’s action “is a step toward accountability.” A representative for Stumpf didn’t respond to requests for comment.
Stumpf, 66, endures yet another public rebuke of his time leading what was once the biggest U.S. bank. Born as one of 11 children of a dairy farmer from Pierz, Minnesota, Stumpf began working at Norwest Corp. in 1982 and rose through the ranks. In 1998, the firm merged with Wells Fargo. He was appointed president in 2005 and succeeded Dick Kovacevich for the top job two years later. He was a respected leader and his firm generated returns that were the envy of rivals.
But his career began to come apart in 2016 when the U.S. Consumer Financial Protection Bureau levied a $185 million fine on the firm, following news reports that detailed how sales pressures at the bank’s branches pushed employees to systemically break rules.
In September that year, Stumpf was berated by lawmakers in two hearings on Capitol Hill, with many of them calling for his resignation. Weeks later, he stepped down.
Since then, he’s kept a low profile. Many executives who resign or are fired following scandals can, with some time, rehabilitate their image enough to land a job at smaller and more anonymous company, or get a board seat.
But Stumpf faces a steeper challenge. The financial industry ban kills any shot at a comeback in that sector. And many boards, especially of large public companies, avoid any affiliation with individuals who could reflect poorly on the firm, thinking of such people as being “tainted.”
The money he accumulated during his years at Wells Fargo all but ensures he’ll never have to work again. But that isn’t all that his critics wanted.
“John Stumpf oversaw a scam that hurt hundreds of thousands of customers and cost workers their jobs,” Elizabeth Warren, a U.S. senator from Massachusetts who’s now running for president, said in a tweet. “It’s not accountability for him to give back a fraction of the millions he made. As I’ve said, he should be criminally investigated -- and put in jail if the facts justify it.”
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