Wells Fargo announces new punishments for execs, including in Charlotte, over sales scandal

Wells Fargo announced Wednesday that eight executives, including its CEO, won’t receive cash bonuses for 2016 in an effort to “reinforce accountability” at the San Francisco-based bank following its sales scandal.

In addition, the bank said it is reducing by up to 50 percent performance-based stock awards granted in 2014, a move Wells said will further slash compensation for the eight executives by a combined $32 million.

It’s the latest actions by the third-largest U.S. bank to repair its image after authorities in September accused Wells’ employees of opening millions of accounts without customer authorization to meet high-pressure sales goals. Since news of the scandal erupted, the bank has faced ongoing fallout, from new federal and state probes to slumping customer activity in its branches.

Wednesday actions mark the first taken against Wells’ highest-ranking executives since late September, when the bank announced that then-CEO John Stumpf and then-community banking head Carrie Tolstedt were giving up stock awards worth tens of millions of dollars. Shortly after, Stumpf stepped down and Wells announced that Tolstedt was no longer with the company.

The latest steps, which were taken by the bank’s board, mostly affect executives based in San Francisco, although two sit in Charlotte – wealth and investment management head David Carroll and chief auditor David Julian. The others are CEO and President Tim Sloan; Chief Financial Officer John Shrewsberry; Avid Modjtabai, head of payments, virtual solutions and innovation; Chief Administrative Officer Hope Hardison; Chief Risk Officer Michael Loughlin; and general counsel James Strother.

Wednesday’s decisions weren’t related to findings of improper behavior by the eight, but instead reflect the board’s ongoing efforts to promote accountability and make sure Wells Fargo puts customer interests first, board Chairman Stephen Sanger said in a statement.

“As we seek to regain trust, the board is taking decisive actions,” Sanger said. “We will continue to work to make right what went wrong and remain focused on providing the accountability and oversight that our customers, employees and investors expect and deserve.”

The eight executives sit on Wells’ operating committee, which is made of the company’s 11 highest-ranking executives. Wednesday’s actions are “based on the accountability of all those in senior management for the overall operational and reputation risk of the company,” the bank said in a statement.

All eight were members of the committee before it was reconstituted in November 2016, the bank pointed out.

In a statement, Sloan said he “fully” supports the board’s actions and said they “are critical to Wells Fargo’s commitment to our customers.”

Wednesday move was not entirely unexpected: A person familiar with the matter told the Observer last month that Wells’ board was likely to scrap annual bonuses for some top leaders.

The new actions also come after Wells last week announced the firing of four executives in its retail bank, the first terminations stemming from the board’s ongoing investigation of the scandal.

More details about how much in compensation Wells Fargo will award top brass for their work in 2016 will be reported when the bank releases its proxy statement later this month. The proxy will also show which board members will be up for re-election.

On Wednesday, the bank said long-serving board member Susan Engel told the company Tuesday that she will not stand for re-election. Engel has sat on the board since 1998 and serves on its credit, finance and human resources committees.

This story was originally published March 1, 2017 at 8:50 PM with the headline "Wells Fargo announces new punishments for execs, including in Charlotte, over sales scandal."