Carrie Tolstedt, the executive who ran the unit at Wells Fargo responsible for opening up millions of phony accounts, may have to give back a portion of her $124.6 million payday afterall.
Wells Fargo’s CEO John Stumpf on Tuesday testifying in front of the Senate said the bank’s directors are considering invoking a clawback provision in Wells’ bylaws that would force Tolstedt to give up part of her compensation for the period in which the CFPB says the bank committed fraud.
“The board has met on the matter,” said Stumpf, declining to give any detail. “And I made an affirmative comment in my testimony.”
But Stumpf said the clawback decision was up to the board and that he would not be a part of it. But he said that Wells Fargo would fully disclose any clawback actions the company takes. That was different that a statement that Stumpf made last week on CNBC when he said the clawback decision was a private one of the company’s board, and he didn’t know if it would be disclosed.
Stumpf also said for the first time that Tolstedt’s exit was tied to the fraud at the bank. In the past, Wells Fargo has said that Tolstedt departure was not related to the CFPB settlement, and that she retired for personal reasons. In announcing her retirement in July, Stumpf praised Tolstedt’s in a press release saying she was “one of our most valuable Wells Fargo leaders, a standard-bearer of our culture, a champion for our customers, and a role model for responsible, principled and inclusive leadership.”
On Tuesday, however, Stumpf said that Tolstedt left for performance issues. He said Tolstedt was told that the bank was “going in a different direction” with her unit. Nonetheless, Stumpf said that Tolstedt was allowed to retire, rather be fired. Senator Elizabeth Warren, during the same hearing, called that decision “gutless.”
“Her departure was based on a number of issues. This was one of them,” said Stumpf, referring to the phony accounts.
Last week, Fortune reported that Tolstedt was leaving the bank with $124.6 million in stock and options. Tolstedt ran Wells Fargo’s consumer unit for the entire time covered by the $185 million settlement Wells Fargo reach earlier this month with the CFPB and the city of Los Angeles. She was also regularly praised for promoting the bank’s agressive cross selling tactics, which is what the CFPB said led to the phony accounts. “Not to invoke some form of clawback would be a form of malpractice,” Senator Bob Corker, R-Tenn., told Stumpf on Tuesday, referring to Tolstedt’s pay.