Wells Fargo (WFC) CEO Stumpf Updates on Actions Taken to Address Improper Sales Practices

September 29, 2016 2:45 PM EDT

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In testimony today before the U.S. House Financial Services Committee, Wells Fargo & Company Chairman and Chief Executive Officer John Stumpf reiterated the company’s commitment to addressing improper sales practices within its retail bank, including actions the Independent members of the Board of Directors have taken to ensure executive accountability. Stumpf also reviewed changes and improvements made by the bank to date, and provided an update on its customer remediation program.

On Tuesday, September 27, the Independent members of the Board of Directors of Wells Fargo announced steps to promote accountability for unethical sales practices in the company’s retail bank, including conducting an independent investigation. As part of these actions, Stumpf will forfeit all of his outstanding unvested equity awards, valued at approximately $41 million based on the closing share price on September 27th. He will also not receive a bonus for 2016, and forego his salary while the Independent Directors conduct their investigation. Former head of the community bank Carrie Tolstedt has left the company, and she will receive no severance or bonus for 2016. She has forfeited all outstanding unvested equity awards valued at approximately $19 million based on the closing share price on September 27th and has agreed not to exercise any of her outstanding stock options while the Independent Directors’ investigation is ongoing.

During his opening remarks, Stumpf said “I respect and accept the Board’s decisions.” He also highlighted that “we have new leadership in our retail banking business focused on ensuring that our team members provide the best service to our customers.”

Stumpf also provided an update on key actions the company is taking to reinforce that its culture is wholly aligned with the interests of customers. This included announcing that the company is accelerating the process for the elimination of product sales goals for retail banking team members from January 1, 2017 to October 1, 2016. He said the reason for the action is that, “We want to make sure nothing gets in the way of doing what is right for customers.”

Another change Stumpf emphasized was that the company now sends customers a confirmation email approximately one hour after opening any retail deposit account and an acknowledgement letter after submitting a credit card application.

Stumpf reported that as part of its effort to ensure that customers have only products they want and need, the company has begun contacting those with open credit card accounts identified by PricewaterhouseCoopers as possibly being unauthorized. For retail deposit account customers, the company has refunded fees and is contacting every single one of them across the country in order to ensure a full understanding of every customer affected by this problem. Stumpf emphasized that “We should have done more sooner, but we will not stop working until we get this right.”

“I am fully accountable for all unethical sales practices in our retail banking business, and I am fully committed to fixing this issue, strengthening our culture, and taking the necessary steps and actions to restore our customers’ trust,” Stumpf said.

For more information, please go to www.wellsfargo.com/commitment.

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