Wells Fargo CEO John Stumpf to forfeit $56m in unvested equity amid probe

Mr John Stumpf, chairman and CEO of Wells Fargo, testifies before the Senate Banking, Housing and Urban Affairs Committee.
Mr John Stumpf, chairman and CEO of Wells Fargo, testifies before the Senate Banking, Housing and Urban Affairs Committee.PHOTO: AFP

NEW YORK (REUTERS) - Wells Fargo & Co said on Tuesday (sept 27) that chief executive John Stumpf will forfeit unvested equity awards worth about US$41 million (S$55.8 million) and will not get a salary during an independent investigation into the bank's sales practices.

Former retail banking head Carrie Tolstedt has left the company, will get no severance and has forfeited unvested equity awards worth about US$19 million, the bank said.

Stumpf and Tolstedt will also not receive bonuses for 2016.

Wells Fargo, the United States' third-largest bank by assets, agreed to pay US$190 million earlier this month to settle regulatory charges that some of its employees opened as many as 2 million accounts without customers' knowledge, in order to meet sales targets.

Mr Stumpf, a member of the board, has recused himself from the investigation, the bank said.

Lawmakers on the US Senate Banking Committee grilled Stumpf about the accounts last week, with some calling on him to resign and forfeit his earnings and hold other senior executives accountable.

Mr Stumpf is scheduled to testify at a congressional hearing on Thursday (Sept 28).

The bank has fired 5,300 people over the matter and had said it would eliminate sales goals in its retail banking on Jan 1, 2017.

However, the Wall Street Journal reported earlier on Tuesday that the firm was planning to eliminate the goals on Oct 1, citing Stumpf's prepared remarks for delivery at the hearing.

Wells Fargo has hired law firm Shearman & Sterling LLP to assist in the investigation.

Up to Tuesday's close, shares of the company have fallen nearly 10 per cent since Sept 8 when it reached a settlement with regulators, wiping off about US$24 billion of market capitalization.