Wells Fargo CEO John Stumpf should take a hit to his wallet over the bank’s unauthorized-account scandal, analysts said Monday.
A report by investment bank FBR & Co. said Stumpf should agree to not take a bonus this year or to work for just $1. In another report, CLSA analyst Mike Mayo also suggested Wells Fargo should reduce Stumpf’s compensation to hold him accountable for the bank’s practices.
The reports came ahead of Tuesday’s Senate Banking Committee hearing in which Stumpf will face questions about a $185 million settlement Wells reached this month. The San Francisco-based bank agreed to pay the fines to resolve claims employees opened more than 2 million deposit and credit card accounts that may not have been authorized by consumers.
Wells declined to comment on the analysts’ reports. But in a statement, it said it is “prepared to provide the committee with information and to discuss steps we have taken to affirm our commitment to customers.”
Wells Fargo, whose largest employment hub is in Charlotte, also continues to face pressure to “claw back” compensation for retiring executive Carrie Tolstedt.
Tolstedt, who is based in San Francisco and ran the unit where the alleged abuses took place, was paid $9.1 million in salary, bonus and stock awards in 2015.
For his part, Mayo says Wells Fargo should claw back Tolstedt’s pay and/or reduce compensation for Stumpf.
The bank should also reconsider whether to continue to allow the person who chairs its corporate responsibility committee, Federico Peña, to remain in that post, Mayo says. Peña became chair March 1, succeeding Judith Runstad, who retired from the board this year.
Stumpf should remain CEO, Mayo says, citing certain financial performance measurements on which Mayo said Wells has outperformed peers under Stumpf, who’s been CEO since 2007.
In an interview this month with CNBC’s Jim Cramer, Stumpf said he doesn’t plan to step down over the unauthorized-accounts scandal.
FBR did not comment in its report on whether Stumpf should go. But the report says Stumpf should prepare for Tuesday’s hearing “as if it was the immediate aftermath of the financial crisis.”
“We are right before a critical election, where the majority in the Senate is very much in play and no member wants to be perceived as siding with a ‘Wall Street bank’ over the average consumer,” the report says.
“A strong performance by Stumpf could mark a positive turning point for the bank,” the report says. “A poor performance could intensify calls for Stumpf’s resignation.”
Ahead of the hearing, former Wells Fargo workers told reporters on a conference call Monday that they faced intense pressure to sell products, like credit cards and savings accounts, or risk being fired.
“I was told by Wells Fargo district and regional management to make my personal bankers and tellers sell, sell, sell,” said Julie Miller, who managed a Wells Fargo branch in Pennsylvania until 2013. Miller said Wells increased sales goals in branches by about 35 percent after its 2008 purchase of Charlotte-based Wachovia, where she also had worked.
She said she was reprimanded when she decided to stop pressuring her employees to push products customers didn’t want or need, as the bank pursued a cross-selling initiative of eight products per household.
“My district manager stated, ‘Work them like dogs if you have to. Do whatever it takes.’”
Khalid Taha, who moved to the U.S. from Syria in 2011, said he faced “unreasonable” sales quotas as a personal banker at Wells Fargo in San Diego, a job he held until July. He said the pressure meant bankers had to prioritize selling products, rather than focusing on what best matched customers’ needs.
“I expected to find a good job in the United States, with good working conditions,” Taha said. “But the reality I encountered was different.”