Wells Fargo Cuts Bonus for Executives Following Scandal; More Customers Are Affected
Wells Fargo has announced to cut its executives bonus following fake account scandal involving its executives. The bank has also acknowledged that the scandal has affected more customers.
The scandal has made Wells Fargo decided to not give cash bonus to its eight top executives including new CEO Tim Sloan, according to USA Today. In the announcement made Wednesday March 1, the bank has decided to withhold the 2016 bonus and to reduce the performance share equity awards for them by 50 percent.
Wells Fargo was caught in 2016 to issue fake accounts of 1.5 million checking and savings accounts along with 500,000 credit cards account that was never authorized by its customers. The scandal was triggered by incentive-compensation program for employees to create new accounts. With the issuance of those fake accounts, then CEO John Stumpf was able to forfeit $41 million, and with $19 million was forfeited by former head of the community banking division Carrie Tolstedt.
What more alarming is the recent findings from Wells Fargo itself. In its annual 10-K regulatory filing to the U.S. Securities and Exchange Commission, the lender admitted that the fake account scandal apparentlu affected more customers than its previous estimation, Reuters reported.
Previously, the scandal was estimated to affect 2.1 million customers, based on the number of fake accounts created. However, further analysis of the customers data revealed that there are more fake accounts created over the period of seven years from 2009 to 2016.
That means there are more customers affected from the accounts created without their approval. The lender has promised to release full result of the findings before the annual shareholders meeting on April 25.
The scandal was uncovered in September 2016 after probes from government agencies. In the aftermath, thousands of Wells Fargo employees was fired because of the scandal, beside the refund of $5 million to its customers for having the accounts they never created. CEO Stumpf had to step down after the embarrassing scandal that spanned over seven years.
Watch the Bloomberg report regarding the resignation of Stumpf below: