From 2011 to 2016, Wells Fargo fired 5,300 mostly low-level employees for allegedly opening more than 2 million unauthorized customer accounts to meet aggressive sales goals.
Since this behavior became a national scandal last fall, the San Francisco-based bank has identified just 10 high-ranking executives who have been terminated, resigned or otherwise left the company, according to an Observer tally. And company officials this week said they aren’t expecting more departures.
In an extensive report released Monday, Wells Fargo’s board outlined numerous actions it has taken to reform the bank, including firing the head of its community bank and taking away millions of dollars in compensation. But some critics say the San Francisco-based bank should have done more to hold top leaders accountable, especially considering the toll on workers who faced intense pressure to hit sales targets.
“It really shows that they are still putting a significant amount of the blame on front-line bank workers as opposed to executives at Wells Fargo,” said Renata Pumarol, a spokeswoman for the Committee for Better Banks, a coalition of bank workers, community and consumer advocacy groups.
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Front-line workers for years worked to shed light on the issue, but executives didn’t take significant action until regulators in September fined the bank $185 million, she added.
Dennis Kelleher, CEO of Better Markets, which advocates for financial reform, said the number of executives terminated by the bank was “laughable” after a scandal that stretched back until at least 2002.
Monday’s report laid blame for the scandal squarely on former community banking head Carrie Tolstedt and former CEO John Stumpf. The community bank, under Tolstedt, had an aggressive sales culture that pressed employees to sell unwanted and unneeded products, and Stumpf was slow to investigate and recognize the scope of the problem, the report found.
Last fall, Stumpf resigned, and Tolstedt was fired for cause, according to the report. They did not receive severance, and the board has now clawed back a total of $135 million in stock awards from the pair. An attorney for Tolstedt said she strongly disagreed with the report, while an attorney for Stumpf would not comment.
In addition to Tolstedt, the board has also said it fired four other executives: Claudia Russ Anderson, former community bank chief risk officer; Pamela Conboy, former Arizona lead regional president; Shelley Freeman, former Los Angeles regional president; and Matthew Raphaelson, former head of community bank strategy and initiatives.
In addition, Wells confirmed last month that three former community bank leaders in California and Arizona are no longer with the company – Maria Clemow, Reza Razzaghipour and Misha Patel Terrazas – but disclosed no other details. Another top community bank executive, Kenneth Zimmerman, who led Wells Fargo’s deposit products group reporting to Tolstedt, made a personal decision to leave the company last year, the bank said last fall.
On Monday, Stephen Sanger, Wells Fargo’s chairman, said the board plans no more terminations, and new CEO Tim Sloan said there was not another “large shoe to drop” in regard to executives. It’s possible other managers have been pushed out, but the bank on Tuesday wouldn’t disclose any other names.
The departures from the community bank are relatively small considering Wells had around 60 regional presidents and other top executives in the unit as of its 2015 annual report. An Observer analysis in October found that more than half of those presidents were in place in 2011 – when authorities say the “widespread illegal” account activity began. The board report does list a number of instances where unnamed regional presidents tried to push back against aggressive sales goals.
Charlotte-based executive Mary Mack is now in charge of the community bank and has taken steps to reorganize her team. In March, she announced a plan to add three new leaders, including one focused on customer and branch experience. But she has kept two top executives who operated in California, which was at the center of the scandal: John Sotoodeh, now head of the Desert Mountain region, and Lisa Stevens, now head of the Western region. The report said Sotoodeh and Stevens had sales issues in their former regions, but also took steps to improve the sales culture.
Monday’s report also examined the actions that top executives on the bank’s operating committee took in response to sales practices in the community bank, including Sloan, former general counsel Jim Strother, chief risk officer Michael Loughlin, current chief administrative officer Hope Hardison and chief auditor David Julian. In general, the report described an insular community bank resistant to outside influence, and a decentralized business model that hampered the ability of executives outside the unit to make changes.
To show accountability, the board said it eliminated 2016 bonuses and cut stock awards for these five executives, as well as for chief financial officer John Shrewsberry, wealth management head David Carroll and payments executive Avid Modjtabai. In total, the leaders lost $32 million in compensation.
No further reductions “are contemplated based on the findings of this investigation,” the report says.
While the board investigation is complete, the bank continues to face additional scrutiny from regulators, including a probe by the U.S. Justice Department co-led by investigators in Charlotte, the bank’s biggest employment hub. The bank’s 15 directors are also up for election at the April 25 annual shareholders meeting in Florida.
The board wants “to change the subject and move on as fast as possible,” said Kelleher, the Better Markets CEO. “But I hope and believe that the Securities and Exchange Commission, the Department of Justice and the shareholders will see through a carefully crafted report that is designed more to deceive than to reveal.”