Wells Fargo said on Wednesday that eight top executives, including chief executive Tim Sloan, will not receive bonuses this year, the latest effort by the megabank to move beyond a sales scandal involving millions of fake customer accounts.
The bank also said the number of customers affected by the sales practices may be bigger than previously estimated, according to regulatory filings released Wednesday.
Wells Fargo’s board has not found that the executives did anything wrong, according to a company statement, rather the action is a way for them to share accountability for the sales scandal that has rocked the more-than-100-year-old San Francisco bank. Wells Fargo also reduced by as much as 50 percent stock awards some executives received in 2014, which would have vested this year.
Overall, the executives lost about $32 million in bonus money, according to Wells Fargo.
The decision is “part of the board’s ongoing efforts to promote accountability and ensure Wells Fargo puts customer interests first,” Stephen Sanger, chairman of Wells Fargo, said in a statement.
“We will continue to work to make right what went wrong and remain focused on providing the accountability and oversight that our customers, employees, and investors expect and deserve.”
Wells Fargo had previously said that as many as 2.1 million people were potentially affected by the problematic sales practices. But the bank disclosed Wednesday that an expanded review of the sales practices could lead to “an increase in the identified number of potentially impacted customers.”
The bank is still conducting an internal review of the behavior, and is looking as far back as 2009 to figure out how many unauthorized accounts were created. Those findings could also lead to “additional legal or regulatory proceedings,” increased compliance costs or the discovery of other problematic practices, the bank said in the filings.
Still, Wells Fargo said it does not expect any additional costs from offering remediation to customers to “have a significant financial impact.”
Wells Fargo has been battered by lawmakers and regulators on both sides of the political aisle for a five-year scheme in which thousands of employees, apparently to meet aggressive sales goals, set up sham accounts that customers didn’t request. Wells Fargo said it fired 5,300 employees for the conduct and has eliminated the aggressive goals that some have said drove the behavior.
Last week, the bank announced that it had fired four current or former senior managers in its community banking division in connection to its investigation into the sales scandal.
In addition to Sloan, the board’s latest decision affects John Shrewsberry, the chief financial officer; David Carroll, the head of wealth and investment management; Avid Modjtabai, head of payments, virtual solutions and innovation; Hope Hardison, chief administrative officer; David Julian, chief auditor; Michael Loughlin, chief risk officer; and James Strother, general counsel.
“I fully support the board’s actions and believe they are critical to Wells Fargo’s commitment to our customers,” Sloan, who was named chief executive after the resignation of John Stumpf at the height of the scandal last year, said in a statement. “It is my personal mission to foster a culture of accountability at all levels of the company and to ensure we are second to none in customer service and advice, ethics, and integrity. Today’s action is another step in that direction.”
This all comes as Wells Fargo is preparing for its independent board members to release its results of its investigation into the matter. Wells Fargo is also still being investigated by several regulators, and the House Financial Services Committee is also reviewing thousands of pages of documents turned over by the bank.
“While these punitive actions are necessary, in our view, we think [Wells Fargo] also needs to articulate how it is changing the community bank’s culture to prevent another mishap in the future,” Cathy Seifert, equity analyst at CFRA Research, said in a research note.