Wells Fargo's board of directors will decide whether to claw back any executive compensation that may have been tied to inflated sales metrics, the company said Monday in a letter to five U.S. senators.
The letter was sent on the eve of a Senate Banking Committee hearing where Wells Chief Executive John Stumpf is expected to face tough questions about the opening of more than 2 million sham accounts at the San Francisco-based megabank.
Last week, Sen. Elizabeth Warren and four Democratic colleagues posed a series of questions to Wells Fargo regarding the potential clawback of bonuses to executives. Some of the questions focused on Carrie Tolstedt, who retired as the bank's head of community banking in July, about two months before the scandal broke.
In the company's response to the senators, Wells said that Tolstedt owns Wells Fargo stock that is worth approximately $43.6 million, plus vested but unexercised stock options that are worth approximately $34.1 million, as well as unvested and unpaid equity awards that are worth about $18.9 million.
The letter does not address whether any of Tolstedt's incentive pay, or that of other senior executives at the company, was tied to performance metrics that later proved to be inflated.
Wells did say that its board has the discretion to determine whether to cancel the unvested and unpaid equity, as well as the authority to evaluate and potentially claw back previously paid incentive compensation. That authority applies to Tolstedt and other senior executives, including Stumpf.
Wells Fargo's board "will assess the relevant facts and circumstances, our award terms, and the extended clawback policy to determine whether to cancel or clawback any incentive compensation," the company wrote.
Wells Fargo has maintained that Tolstedt's retirement was unrelated to the pending enforcement actions (the company agreed this month to pay $190 million in fines and restitution).
"Senior management and the board were aware of the pending litigation, investigations, and discussions with our regulators relating to sales practices when Ms. Tolstedt indicated her decision to retire," the company stated Monday. "No incentive compensation was granted as a result of Ms. Tolstedt's retirement, and none of her equity awards will be 'triggered' or otherwise increased or accelerated by her retirement."
Wells did not say when the company's board expects to make a decision about whether to claw back any executive pay.
"The board may consider any factors it determines necessary or appropriate for purposes of making a determination whether a performance adjustment is appropriate and the amount of the adjustment based on the particular facts and circumstances," Wells said in the letter.
The firm's 15-member board is chaired by Stumpf. Other members include Elizabeth Duke, a former Federal Reserve governor; Elaine Chao, a former secretary of labor who is married to Senate Majority Leader Mitch McConnell; Federico Pena, a former U.S. energy secretary; and Stephen Sanger, retired chairman of General Mills, Inc.
Wells Fargo's letter Monday was addressed to Warren and fellow Democratic Senate Banking Committee members Sherrod Brown, Jack Reed, Robert Menendez and Jeff Merkley. All five are expected to question Stumpf during Tuesday's hearing.
