The independent directors of the board of directors of Wells Fargo & Company announced September 27 that they have launched an independent investigation into the company’s retail banking sales practices and related matters. A special committee of independent directors will lead the investigation, working with the board’s Human Resources Committee and independent counsel Shearman & Sterling LLP. Chairman and CEO John Stumpf, a member of the board, has recused himself from all matters related to the independent directors’ investigation and deliberations.
The independent directors have taken a number of initial steps they believe are appropriate to promote accountability at the company. They have agreed with Stumpf that he will forfeit all of his outstanding unvested equity awards, valued at approximately $41 million based on the closing share price September 27, and that he will forgo his salary during the pendency of the investigation. In addition, he will not receive a bonus for 2016. Carrie Tolstedt, until recently head of community banking, has left the company, and the independent directors have determined that she will forfeit all of her outstanding unvested equity awards, valued at approximately $19 million based on the closing share price September 27. Tolstedt will not receive a bonus for 2016 and will not be paid severance or receive any retirement enhancements in connection with her separation from the company. She has also agreed that she will not exercise her outstanding options during the pendency of the investigation. These initial actions will not preclude additional steps being taken with respect to Stumpf, Tolstedt or other executives as a consequence of the information developed in the investigation.
Stephen Sanger, lead independent director, said, “We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the company’s business are conducted with integrity, transparency and oversight. We will conduct this investigation with the diligence it deserves — and will follow the facts wherever they lead. Our thousands of outstanding team members and millions of loyal customers and shareholders deserve no less. Based on the results of the investigation, the independent members of the board will take such other actions as they collectively deem appropriate, which may include further compensation actions before any additional equity awards vest or bonus decisions are made early next year, clawbacks of compensation already paid out, and other employment-related actions. We will proceed with a sense of urgency but will take the time we need to conduct a thorough investigation. We will then take all appropriate actions to reinforce the right culture and ensure that lessons are learned, misconduct is addressed, and systems and processes are improved, so there can be no repetition of similar conduct.”