Wells Fargo advised its shareholders Wednesday to ratify its reappointment of KPMG as the bank’s auditor, even though the accounting giant failed to detect rampant sales abuses at the San Francisco megabank.
The $1.9 trillion-asset bank also revealed that CEO Timothy Sloan, who took the helm in October following John Stumpf’s resignation, was paid $12.83 million in 2016.
The disclosures were part of Wells Fargo’s annual proxy statement, filed with the Securities and Exchange Commission in advance of the bank’s annual meeting. The meeting is scheduled for April 25 in Ponte Vedra Beach, Fla.
KPMG, which has its U.S. headquarters in New York, has been Wells Fargo’s auditor for decades. Last year, the bank paid KPMG a total of $52.5 million in fees, up from $49.3 million the previous year.
In recent months KPMG has faced criticism for failing to uncover the widespread fraud at Wells, where as many as 2 million phony customer accounts were established between 2012 and 2016.
Last October, Sen. Elizabeth Warren, D-Mass., and three of her colleagues said that KPMG’s performance at Wells raised questions about the quality of the firm’s audits.
But Wells said Wednesday that its board’s audit and examination committee determined that KPMG has a demonstrated understanding of both the financial services industry and Wells Fargo’s businesses. The bank also attested to the “professionalism of KPMG’s team, including exhibited professional skepticism, objectivity, integrity and trustworthiness.”
Wells Fargo’s decision to reappoint KPMG disappointed Gerald Armstrong, a Wells shareholder who is frequently involved in activist-investor campaigns.
Armstrong said Wednesday that Wells should have disclosed publicly in 2015 that it was under investigation for phony product sales, and that KPMG bears some of the blame for its failure to do so.
“It appears that what was happening in 2015 should have been disclosed and was not,” Armstrong said.
Wells Fargo’s proxy statement revealed that Sloan was paid 16% more in 2016 than in the previous year, which was before he moved into the bank’s top job. Chief Financial Officer John Shrewsberry received $9.24 million in compensation last year, up 2% from 2015.
Those pay increases came in spite of the fact that Wells withheld 2016 performance bonuses for Sloan, Shrewsberry and other top executives.
On the other hand, the $12.83 million that Sloan was paid last year was substantially less than the $19.3 million that Stumpf received in 2015.
Stumpf, who resigned after two disastrous appearances before congressional committees, received $2.07 million from Wells last year. Carrie Tolstedt, who stepped down last summer as the head of the company’s retail banking business, was paid $1.29 million in 2016.
Amid the scandal, Stumpf forfeited $41 million, and Tolstedt gave up $19 million, in unvested equity awards.