Wells Fargo is facing more pressure to make changes at the top, with a group that advocates for labor union pension funds calling for two new board directors and taking back compensation from the executive that ran its community banking unit.
In a letter Friday to Wells Fargo’s lead independent director, CtW Investment Group also calls for the bank to commission an outside review of its practices, including the risks incentives carry for encouraging unethical behavior.
“We see little indication that Wells Fargo management and its board has recognized that its high-pressure, punitive corporate culture is one that breeds fear of penalty in employees – not trust that they can honestly share their views,” the letter says.
“Worse still, the steps that Wells Fargo has taken so far – including allowing Community Banking executive Carrie Tolstedt to retire with approximately $124 million in severance and accumulated equity – have been inadequate and send exactly the wrong signal.”
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A Wells Fargo spokesman declined to comment.
Friday’s letter comes after Wells Fargo agreed earlier this month to pay $185 million in government fines to settle allegations its employees opened millions of accounts that may not have been authorized by customers. Wells Fargo did not admit or deny allegations that high-pressure sales goals pushed employees to secretly open the accounts over a five-year stretch that began in 2011.
CtW said the pension funds it works with to enhance stockholder value have more than $250 billion in assets under management and are substantial Wells Fargo shareholders. The group’s letter marks the latest push for changes at the San Francisco-based bank, whose biggest employment hub is in Charlotte, in the wake of the scandal.
At a Senate Banking Committee hearing this week, lawmakers pressed CEO John Stumpf on whether the bank will reclaim any pay awarded to him and other executives, particularly Tolstedt. The claw back chorus has also included bank analysts and the former head of the Federal Deposit Insurance Corp.
Tolstedt, who oversaw the unit where the questionable sales tactics occurred, announced her retirement in July, two months before the settlement was announced. According to a letter the bank sent lawmakers this week, Tolstedt is walking away from the bank with roughly $96 million in Wells Fargo stock, unexercised stock options and unvested and unpaid stock awards.
On Friday, The Wall Street Journal, citing people familiar with the matter, reported Wells has tapped law firm Shearman & Sterling to advise it on executive compensation matters, amid the growing calls to recover executives’ pay.
Robert Mundheim, a lawyer at the firm, is advising the bank’s board on whether it should claw back pay for Stumpf, Tolstedt and Chief Operating Officer and President Timothy Sloan, one of the people said, according to the Journal.
The Wells Fargo spokesman declined to comment.
Stumpf could get peppered with more questions about forfeiting executive pay when he testifies Thursday before the House Financial Services Committee, which said it has launched an investigation into Wells’ sales practices.