Phillips & Cohen partner Erika Kelton highlights Wells Fargo’s decision to claw back $15 million from a former CEO in her latest for Forbes.com and advocates that all banks do more to hold executives individually accountable for banks’ illegal and unethical business practices.
Wells Fargo has clawed back $15 million in compensation from former CEO Timothy Sloan in an unusual step by a bank to hold a top executive accountable for the bank’s legal and ethical violations.
Sloan is the third Wells Fargo executive who has lost compensation through a clawback. Sloan’s predecessor, John Stumpf, and Carrie Tolstedt, the former head of retail banking, forfeited unvested equity awards in 2016 valued at $41 million and $19 million, respectively, because of the bank’s sales scandals.
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Despite paying billions in settlements and making leadership changes, Wells Fargo still cannot manage to change a toxic culture that rewards abusing consumers to a culture that fosters ethical behavior and compliance with the law.
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Congress should consider all ways that would hold bank executives and board members individually accountable and determine how to make those proposals work.
Until then, it should be considered good corporate policy to exercise clawback provisions liberally and to put corporate leaders on notice that they are accountable by requiring clawback provisions in every employment contract with a senior executive. That is when we will starting believing that Wells Fargo and other banks are taking corporate accountability seriously.
Read the entire article, “Wells Fargo Does Something Right,” on Forbes.com.