Wells Fargo branch boss linked to scam exited with $125M
The Wells Fargo executive in charge of the bank’s massive branch network — which last week was found to have created over 2 million fake accounts — left the bank earlier this summer with a $124.6 million payday.
And it doesn’t look like Wells Fargo is going to claw back any of the cash.
In fact, Carrie Tolstedt, the former senior executive vice president of community banking, was praised by CEO John Stumpf as she walked out the door in July — even though the bank was knee-deep in regulatory probes at the time.
Tolstedt, the fourth highest-paid executive at Wells Fargo, owned 2.5 million shares of the bank’s stock and was paid $9.1 million in 2015, according to Securities and Exchange Commission filings.
Various regulators last week fined Wells Fargo $185 million for opening up the 2 million unauthorized accounts — which drained as much as $50 in fees per customer account.
Bank branch employees opened the accounts — called sandbagging inside the bank — to meet quotas. Roughly 5,300 employees associated with the scam have been fired since it was uncovered in 2011.
But Tolstedt, a 27-year veteran of the bank, was allowed to leave with praise and is not likely to lose any of her compensation, according to Fortune magazine, which first reported on her situation.
Wells Fargo, in the wake of the 2008 financial crisis, instituted beefed-up “claw back” provisions — in essence promising shareholders and customers that their top bankers would not be able to keep large paydays if it was found that those rewards were gained through harmful conduct.
It was supposed to be the stick to the carrot of Wall Street bonuses, Fortune reported. “But the latest example of fraud at Wells Fargo shows that the big banks are unwilling to wield those sticks, especially when it comes to their top executives,” the magazine reported.
It is not clear how closely, or at all, Tolstedt was responsible for or even aware of the widespread abusive tactics at the bank,” Fortune wrote. Neither the US Consumer Financial Protection Bureau nor the Los Angeles City Attorney’s office, which sued Wells Fargo, named Tolstedt directly.
The CFPB said Wells Fargo was aware of the behavior for longer than it should have, without putting a stop to it.
What’s more, Tolstedt ran the community banking division of the bank, which included its retail banking and credit card divisions, during the entire period in which the customer abuse was alleged, which goes back to 2011, fortune reported.
Tolstedt took over the division in 2008, after Wells Fargo merged with Wachovia during the financial crisis.
Stumpf, in a July statement, said Tolstedt had been one of the bank’s most important leaders and “a standard-bearer of our culture” and “a champion for our customers.”
A spokesperson for Wells Fargo told Fortune that the timing of Tolstedt’s exit was the result of a “personal decision to retire after 27 years” with the bank. The spokesperson declined to comment on whether the bank was considering clawing back Tolstedt’s back pay.
When Tolstedt leaves Wells Fargo later this year, on top of the $1.7 million in salary she has received over the past few years, she will be walking away with $124.6 million in stock, options, and restricted Wells Fargo shares.
Some of that hasn’t vested yet. But Tolstedt gets to keep all of it because she technically retired. Had she been fired, Tolstedt would have had to forfeit at least $45 million of that exit payday, and possibly more, Fortune reported.
Wells Fargo’s proxy statement says that the bank has “strong recoupment and clawback policies,” and that the bank will revoke bonus pay if it is found that the conduct of an executive resulted in representational harm to the bank, or that the executive was not able to “identify or manage” risks in his or her division.
But there is no sign that Wells Fargo is going to ask Tolstedt to return even a sliver of her stock jackpot, Fortune reported.
On Wall Street, the carrots are still widely handed out. The sticks, however, remain out of sight.