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Wells Fargo Drops Cash Bonuses for Executives

Wells Fargo has just announced that its eight senior executives will not get cash bonuses for last year, Reuters reports. And the equity awards given for three years back in 2014 are to be cut by half as well. These executives include Tim Sloan, CEO, and John Shrewsberry, CFO. This is meant to bring accountability for the latest scandal involving this bank.

 

Over 5,300 employees were fired by the bank for creating over two million accounts for customers without their knowledge and consent. Fees were charged, while the employees credited for making sales targets. Customer funds were moved from existing accounts into these phoney accounts, while customers were charged fees for insufficient balances and overdrafts.

 

On top of that, over half a million credit card accounts were created and 14,000 of these were charged fees in excess of $400,000. The bank was fined by CFBP a large sum of $185 million, plus $5 million in customer refunds.

 

Wells Fargo is among the biggest banks with its stock market capitalization of $300 billion. Currently, its stock is trading at 52-week high together with many other banks, lifted by Trump’s pledges to deregulate the financial industry. Despite firings related to the phoney accounts scandal, the bank employs nearly 270,000 people.

 

Wells Fargo’s annual revenues approach $90 billion, and over $20 billion in net profits. This makes EPS approach $4 a share, thus giving it a P/E ratio of 15. As it seems, the bank is doing quite well despite violating customers’ trust not so long ago.

 

Wells Fargo Execs Discussed by Buffett

During the summer of 2016 one of the biggest stories in the financial world was the rumor and ultimate charge of a major scandal at Wells Fargo. The charges found that employees of Wells Fargo had been opening thousands of fraudulent bank accounts and credit card accounts in order to boost their personal sales goals. While the charge of opening fraudulent accounts was bad to begin with, the company ended up denying that any of the tasks were forced by the corporate office. After news came out, dozens of former employees discussed the very aggressive atmosphere and the insane pressure that they felt.

 

While execs at Wells Fargo had already received a significant amount of public relations nightmares, the former CEO recently received a very negative review by one of the wealthies men in the world. According to a recent news article (https://www.washingtonpost.com/business/economy/warren-buffett-blames-former-wells-fargo-chief-john-stumpf-for-bogus-accounts-scandal/2016/11/11/b8e03284-a833-11e6-ba59-a7d93165c6d4_story.html), Warren Buffet was on record saying that the recent issues at Wells Fargo should be placed on the shoulders of former CEO John Stumpf.

 

Buffett stated that he believed that Stumpf is ultimately a good man that made a horrible mistake. Buffett stated that the high-pressure sales tactics at Wells Fargo are due to a terrible corporate culture that started at the top of the company. Buffett stated that not only was the sales culture poor, but the worst part of the situation was that Wells Fargo and its executives did nothing to stop it or fix the system when they found out that all the accounts were being opened fraudulently.

 

Ultimately, Stumpf and other members of Wells Fargo have been severely penalized. The company as a whole received a fine of $185 million, which is one of the biggest fines ever, but the top executives were forced to resign from their jobs and forego millions of dollars in stock options and bonuses. Stumpf ended up stepping down in October and was replaced by Tim Sloan, who was previously the company’s Chief Operating Officer.

 

 

Wells Fargo Execs Discussed by Buffett

During the summer of 2016 one of the biggest stories in the financial world was the rumor and ultimate charge of a major scandal at Wells Fargo. The charges found that employees of Wells Fargo had been opening thousands of fraudulent bank accounts and credit card accounts in order to boost their personal sales goals. While the charge of opening fraudulent accounts was bad to begin with, the company ended up denying that any of the tasks were forced by the corporate office. After news came out, dozens of former employees discussed the very aggressive atmosphere and the insane pressure that they felt.

 

While execs at Wells Fargo had already received a significant amount of public relations nightmares, the former CEO recently received a very negative review by one of the wealthies men in the world. According to a recent news article (https://www.washingtonpost.com/business/economy/warren-buffett-blames-former-wells-fargo-chief-john-stumpf-for-bogus-accounts-scandal/2016/11/11/b8e03284-a833-11e6-ba59-a7d93165c6d4_story.html), Warren Buffet was on record saying that the recent issues at Wells Fargo should be placed on the shoulders of former CEO John Stumpf.

 

Buffett stated that he believed that Stumpf is ultimately a good man that made a horrible mistake. Buffett stated that the high-pressure sales tactics at Wells Fargo are due to a terrible corporate culture that started at the top of the company. Buffett stated that not only was the sales culture poor, but the worst part of the situation was that Wells Fargo and its executives did nothing to stop it or fix the system when they found out that all the accounts were being opened fraudulently.

 

Ultimately, Stumpf and other members of Wells Fargo have been severely penalized. The company as a whole received a fine of $185 million, which is one of the biggest fines ever, but the top executives were forced to resign from their jobs and forego millions of dollars in stock options and bonuses. Stumpf ended up stepping down in October and was replaced by Tim Sloan, who was previously the company’s Chief Operating Officer.