Professor Elam

Thursday Sept 15, 2016

We have been following the Well Fargo Scandal.  CEO John Stumpf is on record saying he wanted as many customers as possible to have a WFC credit card which of course earns interest and fees for the Bank. Carrie Tolstedt was in charge of the unit where employees allegedly opened unauthorized accounts. The Consumer Financial Protection Bureau fined the bank $185 M for these actions. Now the result.

Carrie Tolstedt was in charge of the unit. Her retirement was announced in July effective the end of this year. She walks out with $95 Million in stock options. Meanwhile the poor blighters who did what they were told, all 3,500 of them were fired. Claiming his compensation was not tied to 'oroduct sales goals' (gee how is that for a CEO turn of the phrase spin!), Stumpf of course gets to keep his job. He says he is responsible and accountable.

Gee lots of ethical questions here. If he is accountable why is there no loss of any kind for Stumpf? Stumpf insisted the employees push product to customers. Here they did so without informing clients they had created accounts. If the employees had refused, what do you think would have happend to the. If not fired no doubt criticized and no bonus.

Asked about claw back provisions for Tolstedt's options, well he replied that is a Board matter. Does anyone think the Board will discipline her while letting him continue as CEO And recall of course that he picks the Board Members.

What about the fired employees?

Regarding the abusive Catholic priests comedienne Wanda Sykes remarked, what does it take to get kicked out of this club? 

Okay so WFC paid a fine, but as in so many instanced the Too Big To Fail organizations like this simply consider fines a cost of doing business.

What do you think would be appropriate?

This falls under issues of the Tone at the Top, and Corporate Governance.