Wells Fargo yesterday fired four senior community banking managers it has tied to the simmering scandal over the opening of unauthorized accounts and high-pressure sales tactics that last September cost the bank $185 million in fines — and 5,300 lower-level employees their jobs. John Stumpf, who was CEO during the shenanigans, retired with a reported $134.1 million package in October following contentious congressional hearings.
The four current or former senior managers were terminated for cause by a unanimous vote of the Wells Fargo board, according to a news release. They are: Claudia Russ Anderson, the former community bank chief risk officer; Pamela Conboy, Arizona lead regional president; Shelley Freeman, former Los Angeles regional president (recently head of consumer credit solutions) and Matthew Raphaelson, head of community bank strategy and initiatives.
“None of these executives will receive a bonus for 2016 and they will forfeit all of their unvested equity awards and vested outstanding options,” according to the bank.
“Carrie Toldstedt, who formerly headed the community banking division at the heart of the investigation, [also] agreed to forgo $19 million in unvested stock awards” when she retired last year, Kevin McCoy reports for USA Today. But she left with an estimated $124.6 million payout, he continues.
“Tuesday’s statement did not detail the connections between the four fired executives and the unauthorized account openings, but the executives worked or oversaw parts of Wells Fargo’s business believed to be the most deeply involved in the unethical practices,” writes James F. Peltz for the Los Angeles Times, which first exposed the shady sales tactics at the bank in December 2013. Neither Peltz, nor anyone else, was able to elicit a comment from any of the former employees.
“Authorities haven’t accused any of them of wrongdoing,” Bloomberg’s Laura J. Keller points out.
Many of the 5,300 employees previously canned “blamed Wells Fargo's management for pressuring them to meet unrealistic sales goals. In January, Wells Fargo shook up its pay system for bank tellers and other employees, eliminating sales goals linked to bank accounts and other financial products and basing employee compensation on customer service, usage, and growth,” USA Today’s McCoy reports.
“Internally, some of the fired executives were connected in employees’ minds with some of the practices that were central to the scandal,” reports Emily Glazer for the Wall Street Journal. “Ms. Freeman was said to be a driving force between a January sales push known as ‘Jump into January.’ Former and current employees have told the Journal that the event, pioneered by Ms. Tolstedt, set lofty goals that led some staff to engage in improper behavior.
“During the event, midlevel managers on the 43rd floor of the Wells Fargo Center in Los Angeles had to ‘run the gauntlet,’ current and former employees said. This involved regional managers yelling out the number of products or services their branches sold on an almost hourly basis.”
Among the prizes for employees at winning regions, Glazer reports: $100 gift cards and bobbleheads with the face of Ms. Freeman.
“Consumers have exacted their own sort of punishment on the bank: account openings in October, the first full month of results after news of the account scandal broke, plunged 44%. Account openings in November fell 41% and, in a banking activity report released last week, Wells said that account openings in December fell 31% compared to the prior year,” Maggie McGrath reports for Forbes.
“‘… We remain focused on strengthening our relationships with existing customers and building new ones with potential customers,’ Mary Mack, the head of community banking, said in a statement last week, referring to the new compensation plan unveiled in January that eliminated sales goals and put a bigger emphasis on customer service,” McGrath writes.
The bank says that its investigation is “ongoing” and that it expects to announce any developments at its annual meeting in April.
“It’s encouraging that the board of directors is taking this seriously, and that they are putting everything on the table and trying to look at this with a clear vision about what really happened,” Marty Mosby, an analyst with Vining Sparks, a Tennessee-based investment firm, tells George Avalos of the San Jose Mercury News.
“The board now realizes how widespread this was, that it wasn’t just the grassroots, but that people in top positions knew about this, tried to micro-manage this,” Mosby said.
Is it my imagination or did I hear a collective “duh” rise out of the morning mist?